Wheelie Waste received $481,800 in funding from the federal and state governments on Monday, for a new facility at Mason Street, near Bunnings, in east Warrnambool.

The facility will separate, decontaminate and crush recyclable glass material sourced from the region's local councils.

Wheelie Waste general manager Chris Philp said the project would cost about $2 million, with Wheelie Waste tipping in about $1.5 million.

"Construction should take place this year. We have been waiting on this announcement in order to hit the starter," Mr Philp said.

The facility will significantly boost the region's capacity to recycle glass, instead of transporting it to Melbourne.

Mr Philp said the business was in discussions with third parties in the construction industry who could use the crushed glass in road making, concreting, and back-filling land.

"We are investigating other avenues outside of just the road industry for the use of this product, to ensure this project is long-term sustainable," he said.

Wheelie Waste collects recycling for councils in Warrnambool, Corangamite, Colac Otway, Ararat, Horsham, Hepburn and Southern and Northern Grampians.

"Those and others could use the facility, we hope to see it as a central base," Mr Philp said.

He said the project would progress in stages, with an initial goal to sort glass from other recycling.

"The market is changing rapidly," Mr Philp said.

"We have to clean up our recycling and people need to be part of that. Not just in removing glass from co-mingled bins, but also the quality of the product itself, to keep your rubbish out of your recycling and that's the focus of this facility."

Federal Wannon MP Dan Tehan said the plant would create jobs during construction and through the ongoing running of the plant.

"Through the Recycling Modernisation Fund the Morrison and Andrews' governments are co-funding what will be a $2 million project with the company and local government to stimulate the local economy and help our environment," Mr Tehan said.

The project is one of seven glass and plastic initiatives, worth $8.1 million, the federal and state governments announced funding for statewide on Monday.

Victorian Environment Minister Lily D'Ambrosio said the new sites would be a boost to the state's recycling capacity

"Not only will these seven projects announced today create jobs, but they'll redirect 205,000 tonnes of glass and 23,000 tonnes of plastic out of landfill every year, it's a massive gamechanger," Ms D'Ambrosio said.

"It means more jars, bottles and fibreglass made of recycled glass and plastic, which will also be used to build new roads and footpaths throughout Victoria."

The governments say the projects will double Victoria's domestic glass recycling capacity, increase plastic recycling by 40 per cent and create 350 jobs.

RELATED: Wheelie Waste pushes ahead with plan for multi-million dollar Warrnambool facility.

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