The works, which the federal government said would begin in late 2020, are now unlikely to start before 2023.

Funding for the upgrade was first announced by federal Wannon MP Dan Tehan before the 2019 May election but work has been stymied by a lack of coordination between the state and Commonwealth governments.

The highway is a state asset, so the Victorian government is responsible for the project but the majority of the funding comes from Canberra. The joint arrangement requires both levels of government to agree before planning and design work can begin.

"The whole thing has taken too long and the losers are the people in south-west communities," Princes Highway West Action Alliance lobbyist Stephen Lucas said.

When Mr Tehan announced the funding, he said the works could "basically get going without the state government" committing funds. But when work still hadn't started in late 2020, it emerged the federal funds hadn't reached state coffers because the two governments still hadn't struck an agreement.

Mr Tehan blamed the delay on the state government's reluctance to commit its portion of the funding.

The project was finally signed off in November 2020, with the Victorian government committing $38 million for upgrades along the whole stretch of highway between Colac and the South Australian border.

The state government couldn't specify how much of that figure would be directed to the Warrnambool to Port Fairy section but said it had committed to an 80/20 funding split. The federal government has pledged $60 million to upgrade the dilapidated stretch.

Many expected repair work would start shortly after the November sign-off, but after inquiries from The Standard a government spokesperson said the Department of Transport had only just begun the planning process, which was expected to take a further 12 to 18 months. This effectively pushes construction works back to 2023.

The state government said an administrative error by the Commonwealth in the November 2020 budget delayed the release of federal funds until May this year.

In a statement to The Standard, Mr Tehan said the "first tranche of works" between Warrnambool and Port Fairy - a series of bridge strengthening projects in Dennington, Rosebrook and Port Fairy North - was "expected to start in October 2021 and be complete by June 2022".

These dates appear to contradict the timeline provided by the state government, suggesting the two parties still aren't on the same page. A spokesperson emphasised the Victorian government was working with Federal Infrastructure Minister Michael McCormack, rather than Mr Tehan, on the project.

"We will continue to work constructively with the Federal Infrastructure Minister to get on with detailed planning work for future upgrades to the Princes Highway between Warrnambool and Port Fairy," the spokesperson said.

Mr Lucas said the latest setback was more of the same for the neglected stretch of highway.

"It has taken literally years to get to this point," Mr Lucas said, adding that he wasn't surprised at the delay. "It's disappointing but that's nothing new," he said.

Member for South-West Coast Roma Britnell said the lack of action showed the state government's "apathy for regional Victoria".

"The roads in the south-west are in a terrible condition, they're dangerous, and it tells a story about the state government's priorities and that country Victoria isn't high on the list," she said.

The Victorian government was unable to specify which areas of the highway would be upgraded or how long the project would take, saying these details would be determined in the planning process.

The news comes just a month after major upgrades to the Princes Highway east of Warrnambool were delayed by another 12 months with the state government blaming wet weather for the setback.

"The project to the east of Warrnambool is a debacle," Ms Britnell said. "It's so bad that the Auditor General has said that it needs closer scrutiny."

A spokesperson said the state government had spent $40 million over the past four years on rebuilding and repairing the highway.

"The Princes Highway is one of Victoria's busiest freight and transport routes, and together with the Commonwealth government, we're examining how best we can improve it for the thousands of drivers who use it each day," the spokesperson said.

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