The Crossley engine, which dates back to 1907, once powered the Dalvui homestead near Terang but for years sat in pieces.

South Western District Restoration Group committee member Graham Cottrill said the engine, after being removed from the homestead, was pulled apart and stored in two or three sheds at Bookaar.

"The fly wheel was dropped off under a tree and it was probably there for 15 years or so," Mr Cottrill said.

The 16-horsepower engine weighs about four tonne and was used to run a generator and three-stage pump to send hot water around the homestead.

It also powered an ammonia pump which ran the refrigeration for the property's cool rooms in the "early days", Mr Cottrill said.

The engine was saved after Shepparton's Robin Close purchased the parts and spent two years restoring it.

It was brought back to life in 2013, and then in 2014 it was brought to Cobden for the weekend during the group's annual rally. But now it has returned for good.

"Robin became ill, and one of his last wishes was that the engine be returned to the district and that's where the history began," Mr Cottrill said.

"It's a lovely engine and a credit to the many hours that Robin spent on it."

The club purchased the engine and has now installed it at the grounds in Cobden.

"To keep it in the district with its historical significance, it's well worth getting back," Mr Cottrill said.

"We were lucky to get it back.

"The club was pretty privileged to get the engine because there's not many of them around.

"They're pretty rare in Australia."

Mr Cottrill said Robin's son would be at this weekend's rally to help run it. "It normally runs on a gas producer that produced gas from charcoal," he said.

"We have the remains of the gas producer here but it's not runable, so now we run the engine on LPG gas."

The Dalvui homestead was built around 1907 for the Black family.

Its gardens were designed by famed landscape architect William Guilfoyle who is also responsible for Melbourne and Warrnambool's botanic gardens.

The gardens cover about seven acres and feature 1200 different plants species.

The two-storey Queen Anne-style homestead is set on about 562 acres, and features 10 bedrooms, formal and informal living rooms, a breathtaking timber staircase and a stately dining room.

The property has had four owners in its lifetime recently selling for a reported $10 million.

The 47th Cobden Vintage Rally will be held at Racecourse Park Rally Ground, on Saturday and Sunday from 10am to 5pm.

There will be displays of vintage motors, machinery, tractors, cars and trucks. Admission is $15 for adults with kids free.

Group president Brian Cockayne said there would be more than 100 tractors on display and the Victorian branch of the International Harvesters Club would be holding its annual get together there as well.

He said the event would play host to the two biggest portable steam engines in Australia which date back to 1906. They came out of a tin mine in New South Wales and are eight-metres long and four-metres high.