Bendigo’s tram depot and museum site is on track to become a major Victorian tourist attraction after a major redevelopment opens it to the public.

The Bendigo Tramways Depot and Museum has been awarded $1.5 million in state funding to upgrade its restoration workspace and allow visitors to tour safely through the site to experience a working attraction in central Victoria.

The Bendigo Tramway Depot dates back to 1903, and is Australia's oldest operating depot. The workshop restores heritage trams based on local and international demand and following an upgrade of its workspace will employ 22 additional staff and open the floor safely to tourists.

"The redevelopment of the administration building will create a safer and more inviting environment for the many hard-working volunteers who contribute thousands of hours each year to preserving Bendigo's tram heritage," rural and regional development minister, Jacinta Allan, said.

The project includes extending the depot and workshop to provide more workspace to allow the workshop to expand employment and training and to cope with increased demand for services.

Heritage conservation and safety works will be carried throughout the depot to preserve the depot and to make it safer for staff, volunteers and visitors.

The administration building, research centre and volunteers' accommodation will be redeveloped, along with site upgrades and landscape works.

The project will cost a total of $3.1 million, with the Commonwealth Government and City of Greater Bendigo combining to cover the remaining $1.6 million.

"The Brumby Labor Government will provide $1.5 million from its Regional Infrastructure Development Fund (RIDF) as part of its ongoing partnership with regional and rural places to create stronger communities with better access to a range of infrastructure," Allan said.?

RIDF has so far contributed $506 million to 281 announced projects throughout regional and rural Victoria worth more than $1 billion.