The $1.2 million upgrades, partly funded by the state government, were unveiled on Friday morning and accentuate the local success story of the last remaining coloured woollen mill in Australia.

Visitors to the mill, operating since 1947, learn all about the journey of the fibre: from the source, through to the manufacturing process, to how the products fashioned with the fibres end up on shelves.

The upgrades to the mill enhance this experience and include an international tourist welcome centre and the creation of a new animal farm complete with baby goats, alpacas and sheep that visitors are able to meet and feed.

The mill car park has also been upgraded to accommodate bus and coach parking and a new Mill Cafe was unveiled to champion local produce.

Executive Director of Creswick Woollen Mills, Boaz Herszfeld, said Australia was well known around the world for the highest quality natural fibres and the mill was proud to uphold that reputation out in Creswick.

"Our new upgrades will only help to propel this great Aussie company further," he said

Mr Herszfeld said the higher quality attractions at the mill had already boosted June and September holiday programs and had assisted with smoother international visitor arrivals.

A full time farmer is now on site to welcome guests to the barn setting, which has more space for visitors to learn about the journey of fibre - from the animals in the barn to the shop shelf.

"Tourism is very important, especially in regional Victoria. It's important to keep developing tourism attractions to go with great food and accommodation to improve the visitor experience," Mr Herszfeld said.

Creswick Woollen Mills is located at Railway Parade, Creswick.

Have you signed up to The Courier's variety of news emails? You can register below and make sure you are up to date with everything that's happening in Ballarat.