The project is targeted for completion by the end of 2023 and will bring VLocity trains to the south-west for the first time, the governments say.

The works will upgrade more than 50 public level crossings on the Warrnambool Line.

Improved train technology will detect when VLocity trains are approaching and add boom gates to 17 of these crossings to boost safety for motorists and train passengers.

Once complete, there will be no unprotected public level crossings on the line.

Federal Wannon MP Dan Tehan said the upgrades will be a game-changer for the region.

"This crucial upgrade will see Victorians who use the Warrnambool line moving to their destination safely, efficiently and comfortably," Mr Tehan said.

"It will also provide more Victorians with better access to Warrnambool and our state's south west, which could deliver an economic boom including for our local tourist industry and for the local economy in our recovery from COVID-19."

Delivery of Stage 2 of the Warrnambool Line upgrade has been integrated with the work already under way on Stage 1, with timeframes for both stages adjusted to maximise the benefits of the project as well as deliver efficiencies and minimise disruption.

Work on Stage 1 of the project is continuing, with signalling upgrades between Waurn Ponds and Warncoort on track to be completed in coming months.

More than 24 kilometres of signalling cable has already been installed, along with eight kilometres of access tracks along the line.

But the government says coronavirus restrictions have also caused delays in the signalling design, and work to commission the upgrades being delivered as part of Stage 1 will occur mid-to-late next year.

The new crossing loop at Boorcan and a fifth weekday return service between Warrnambool and Melbourne will come into operation following the completion of signalling and commissioning works along the line.

Victorian Transport Infrastructure Minister Jacinta Allan said VLocity trains would deliver improved journeys for passengers.

"We know passengers on the Warrnambool Line are looking forward to these upgrades, and we're doing everything we can to deliver them as soon as possible, despite the challenges of the global pandemic," Ms Allan said.

"The critical planning and design work required to develop the project timelines is now complete, so it's time to get on with the job of delivering the next stage of this project which will continue to provide important supplier and job opportunities to the region."

Deputy Prime Minister and federal Infrastructure, Transport and Regional Development Minister Barnaby Joyce said the Australian government was delivering the infrastructure Victorians need and deserve.

"The Australian Government has delivered the funding needed to bring VLocity trains to Warrnambool, and we're making sure these upgrades get underway as soon as possible for passengers," Mr Joyce said.