The federal government committed $60 million for works between Warrnambool and Port Fairy 18 months ago but the federal Department of Infrastructure says the state and federal governments are still working "closely to finalise funding arrangements" for the state-delivered project.

The Princes Highway West Action Alliance said in a statement it supported the state budget's focus on regional Victoria, but was disappointed and frustrated by a lack of focus on the Princes Highway West in the state budget papers.

"We know the federal government committed $60 million for works back in 2019," highway alliance spokesman Stephen Lucas said.

"We know the usual protocol would be for the state government to make a 20 per cent contribution and we know how desperately needed these major upgrades are.

"And yet, for whatever reason, the Victorian government clearly isn't willing to fund those works to any degree, as demonstrated by the lack of focus on the Princes Highway West in this week's budget."

Mr Lucas said the group's frustration couldn't be understated.

"Every time we think we're getting closer to a tangible outcome, we hit another inexplicable roadblock and we're back to square one," he said.

Victoria's Department of Transport told The Standard last week it was working closely with the federal government and "awaiting the release of funds to commence detailed planning for these works"

Mr Lucas said the increase in tourists now COVID-19 restrictions had eased would return traffic volumes to the highway, making the road work all the more necessary.

He said the group would continue to lobby for both further further funding and commitments to come to fruition.

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