The federal government has contributed $220,000 for the project as part of a $5.4 million injection into Moyne Shire from the local roads and community infrastructure program.

The council had twice attempted to secure funds from Heritage Victoria to restore the structure but was unable to receive the $200,000 required.

Councillor Jordan Lockett joined the council in 2016 hoping to see the shed restored after it sat vacant and boarded up for decades.

"The money will be spent on bringing it up to a level where we can bring down those barriers and have people engage with the building," he said.

"Inside it would be lovely to have photos of the train and whatever happens the landscape should incorporate the history of the train and station.

"This is the first step and I imagine we will be putting it out for public or commercial interest, it will be up to council to decide where we go from there."

The railway shed was built to store goods when the rail from Melbourne was extended from Terang via Warrnmabool to Koroit and then Port Fairy in 1890.

Moyne mayor Daniel Meade said the federal money would also be spent on a spread of projects across the shire, including footpaths in Koroit, Peterborough, Mortlake and Purnim.

The Panmure netball changerooms will also receive $520,000 and the Rail Trail $600,000 for resurfacing works.

"It enables us to bring projects forward that might have been in our 10-year plan and use local contractors wherever possible," Cr Meade said.

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