The state government has listed $384 million for the hospital, including a new emergency department, operating theatres and acute impatient beds in the state's 2021-22 budget papers.

The Warrnambool Base Hospital stage two redevelopment has been a priority for the region for six years.

Western Victoria MP Gayle Tierney said the government was backing doctors, nurses and other healthcare workers to ensure "locals get the very best care at a bigger, better Warrnambool Base Hospital".

A service plan, master plan and feasibility study was undertaken in 2019 to inform detailed planning of the redevelopment.

South West Healthcare chief executive officer Craig Fraser said the funding will set the south-west region up for decades to come.

"We're very happy, it's pretty unbelievable really," he said.

"We were hoping for it to occur but to get the funding is just amazing, it's beyond our wildest dreams.

"We were never aware of what the figure was to deliver the second stage but this amount will definitely deliver the redevelopment we've had on the cards and been planning toward.

"It will include the logistics hub and clinical tower which is an amazing outcome."

READ MORE: Land purchased to create the region's first Regional Logistics Distribution Centre in Warrnambool

Mr Fraser said not a minute would be wasted and works on the logistics hub will begin "straight away" with the goal of starting early next year on the logistics hub, then the clinical tower.

"It includes critical infrastructure including a new Emergency Department theatre complex as well as a new ward, pediatric unit and a new dialysis unit, as well as back of health items such as a brand new linen processing department, kitchen and increased parking onsite.

"I think it realy sets us up to continue developing healthcare in south-west Victoria.

"This will set us up for the next 20 to 30 years, it's that important and a bigger outcome than some people realise at this point in time."

He said it was a combined effort across the south-west.

"It includes our councils, community leaders and media outlets, everyone has worked really hard on prioritising this as a major project in the south-west. Everyone knew how important it was to secure long-term healthcare in Warrnambool and the region."

Member for South West Coast Roma Britnell said the announcement was reason for the region to celebrate.

"I'm proud to have been a strong advocate for this project over the past five years and am so pleased that the Andrews Government has recognised the healthcare needs of our community matter," Ms Britnell said.

"We are a growing community and the Base hospital is the largest healthcare provider in our region."

She said the upgrades were "long-overdue".

"The emergency department is too small for what the community needs. Elective surgery wait lists are among the highest in the state because the facilities just aren't up to the demand they are under," Ms Britnell said.

"The nurses and doctors have been doing an extraordinary job under huge amounts of pressure to make sure everyone gets the care they need - this funding will make their job a little bit easier for them and they absolutely deserve that.

"It's my job to now ensure that every single dollar is spent properly with no waste so what we end up with is exactly what we need."

More to come.

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