The flag, which is housed at the Art Gallery of Ballarat, will be taken to Adelaide for conservation works to ensure its long-term preservation.

It will be the first time repairs have been done to the flag in 37 years.

The cost of the restoration will be met by the Ballarat City Council and the National Museum of Australia.

But the council said last night the full cost of the work will not be known until the flag is assessed by restoration specialists at Artlab Australia.

The council received a permit from Heritage Victoria to allow the works to go ahead.

The project is expected to take up to six months.

A report commissioned by the council in April this year said extensive work was needed to preserve the flag and improve its appearance.

The report from Artlab Australia recommended construction of a new climate-controlled display case for the flag.

It found the last conservation works to the flag, which were done in 1973, had contributed to the need for new repairs.

A polyester backing which was added to the flag then would need to be replaced, the report said.

A timber backing board will also be replaced.

Ballarat mayor Judy Verlin said the council was committed to the flag's long-term preservation.

"It's a national treasure. The flag is more than 150 years old and it's extremely fragile," she said.

The Eureka flag was flown by the diggers at the Eureka Stockade on December 3, 1854.

Ballarat historian Anne Beggs-Sunter said she believed the flag had not left Ballarat since 1895.