The Dereel Soldiers Memorial Hall, which played a vital part in sheltering victims of the March 2013 bushfires in the Golden Plains region, will be refurbished inside and out to include new entrances, lighting, drainage and facilities.

The funding injection is part of the $1 billion Regional Growth Fund aiming to support growth in regional Victoria.

Western Victoria MP Simon Ramsay said the upgrade would help to strengthen the local community.

"The Dereel Soldiers Memorial Hall is a key facility that is used for community get-togethers," Mr Ramsay said.

"The improvements will build stronger connections within the community by providing an attractive and functional facility for community meetings and events."

Golden Plains Council is also playing a part in the redevelopment, pledging the remaining $150,000 needed to complete the project.

Liberal candidate for Buninyong, Ben Taylor, sees the upgrade as part of a larger contribution to the region.

"The Regional Growth Fund invests in community-led projects to drive jobs, investment and innovation in rural and regional Victoria," Mr Taylor said.

The project is expected to be completed by late 2015.