The federal government's 'Local Roads and Community Infrastructure Program' will provide $1.2 million to replace a 600-metre section of the renowned tram track on Wendouree Parade.

Ballarat Tramway Museum president Paul Mong knows how crucial the grant is to his cherished vehicles.

"Without this funding, the trams would not be able to operate for much longer," Mr Mong said.

"This major infrastructure is going to secure the longevity of our organisation as we celebrate our fiftieth year. We're looking at replacing the whole track, starting April 2022."

The works will protect both mechanical aspects and tram bodies, according to Mr Mong.

"Our current track is over 100 years old and our trams are the same," he said.

"It's like driving your car on a gravel road. The amount of damage the track is doing to the trams is phenomenal."

This monetary sum was allocated after much campaigning from volunteers, who have been rewarded for their perseverance.

"For the past 10 years, we've been lobbying, and working with the City of Ballarat, to try to obtain funding," Mr Mong said.

Mr Mong believes the financial boost will have numerous advantages.

"This grant will benefit the organisation, but also provide a safe and inviting environment for our thousands of visitors," he said.

"It will generate local jobs. It will have an economic impact for the City of Ballarat."

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After the economic and psychological blows of the global pandemic, there is a sense of optimism amongst tram lovers.

"We haven't been able to operate for a large period of time," Mr Mong said.

"(The pandemic has) had a huge impact on revenue, but also on our volunteers. They have suffered. The mental health of our volunteers is important for the organisation.

"Giving hope, which this funding will do, will be a good step forward for a more inviting and safer tramway museum.

"We're looking forward to the coming weeks after Christmas and the school holiday period."

In addition, Mr Mong is eagerly anticipating a new museum opening in early 2022 and he even harbours a dream of extending the track in the future.

The Ballarat Tramway Museum, which has 250 members and 60 active volunteers, operates the fleet of trams. The site around the lake harkens back to a bygone era when a large network of trams graced the town from 1887 until 1971.

Mayor Daniel Moloney is appreciative of the federal funding.

"The trams are icons of the Lake Wendouree and Botanical Gardens landscape, as well as being very popular tourist attractions," Cr Moloney said.

"We have directed funding to ensure the trams can ring their distinctive bells around Wendouree Parade for many years to come."

Mr Mong is committed to his cause.

"What we're trying to do is showcase and preserve the history of Ballarat," he said.

Trams are running every Saturday (except Christmas Day), Sundays, and every day between Boxing Day and New Year's Day from 11am to 4.00pm. Santa trams are running on Tuesday 21 December at 11.30am. All visitors over the age of 15 must be fully vacinated for COVID-19 and be able to show proof of vacination.

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