Corangamite Shire mayor Ruth Gstrein said the improvements would make the region's roads safer for residents and visitors after "incredible" advocating by the region.

"These road issues have been our top priority for a long time," Cr Gstrein said. "Council and community members have put a tremendous amount of effort over many years putting forward the case for this kind of investment. It's all about safety for local users and visitors.

"Some of the arterial roads in our shire are in terrible condition and these improvements will be a great relief for residents."

Minister for Roads and Road Safety Ben Carroll announced the funding will be broken into three parts; Great Ocean Road upgrades will receive $140 million, North-South Arterial Roads from the Great Ocean Road back to the Princes Highway will get $115 million and Barwon South West Dairy Supply Chain roads will receive $17.4 million.

Cr Gstrein said agriculture and tourism, the two pillars of the shire's economy, would both benefit.

"The Barwon South West Dairy Supply Chain across the south-west contributes a quarter of the nation's milk production and dairy exports, so this announcement is a real positive on a national and state level as well," she said.

"While the roads have been quiet over the past couple of months, we're expecting increased domestic travel and international travel to come back strong. We want the roads to be as safe as possible for tourists and the community."

Newly-elected Coastal ward Councillor Jamie Vogels said the funding would make things much safer for motorists.

"The Twelve Apostles and the Great Ocean Road are great assets but their popularity has been a double-edged sword as the degradation of the roads has caused a lot of frustration for local residents in terms of safety concerns, damage to vehicles and increased travel times," he said.

"When the COVID crisis is over and tourism picks up again, we can expect more than 2.6 million international and domestic visitors a year. Hundreds of them will use local arterial roads such as Cobden-Port Campbell Road, Princetown Road and Timboon-Colac Road each day to return to Melbourne."

Moyne Shire Council welcomed the announcement and chief executive Bill Millard hopes the state government will further fund road improvements identified in the Dairy Supply Chain Study and other reports.

"While today's announcement does not clearly indicate the commitment to upgrades on the Princes Highway, council continues to urge the state government to come to the party and follow the federal government's lead in committing funds to essential works for the Princes Highway West."

Great Ocean Road Regional Tourism chair Wayne Kayler-Thomson said the funding was critical to improve the quality of the experience and safety for visitors and locals.

"We welcomed the investment in the continued maintenance of the Great Ocean Road and funding for inland roads," he said. "We look forward to seeing the detail on this funding and hope it also includes funding for enhanced signage.

"The region is still seeking a commitment of further funding for key demand driving attractions, including the full implementation of the Shipwreck Coast Masterplan and the Twelve Apostles Precinct plan.

"We are keen to see further demand stimulation Initiatives that will assist short term recovery of the visitor economy and mitigate against projected loss of jobs and businesses.

"Stimulation of visitation outside the summer peak is critical for businesses especially whilst international borders remain closed and large events remain without clear guidelines on how they can proceed."

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