The man had waded into the water near Larter Street in Canadian on Sunday before he felt the firearm underneath his foot in the mud, bringing it into a police station about 7pm.

Pictures supplied by police show a corroded .22 handgun with a primitive cocking assembly. 

While the owner of the gun remains unknown, police said it appeared it had been constructed to work like a firearm with a crude trigger mechanism.

Lake Esmond, which is located near Sovereign Hill, is a popular watering hole with residents in the warmer months, despite having a half-submerged crane in the middle, which is exposed when the water level is low enough.

Anyone with information about the firearm is urged to contact Crime Stoppers on 1800 333 000 or submit a confidential crime report to www.crimestoppersvic.com.au