STRATHFIELDSAYE Playgroup says their building is in urgent need of an upgrade.
The playgroup is in the same building as the Strathfieldsaye kindergarten and a maternal and child health nurse service.
The complex also consists of two adjoining rooms and a shared kitchen.
The playgroup's president Natalie Johnson said the facility - which was 35 years-old - was not sufficient for the amount of children attending the playgroup and kindergarten.
"The kitchen is in dire need of repair and the kindergarten can't run a three-year-old class due to a lack of space," she said.
She said Strathfieldsaye was an up-and-coming area with many young families.
"We've had three new families join up since January and have two inquiries per week," she said.
"There's a real demand for kindergartens and playgroups in this area."
The building is located on the Strathfieldsaye recreation precinct and Ms Johnson said the council had applied for federal funding to extend the complex into the car park.
She said this would allow the playgroup to run for five days a week (rather than its current three days), the child health and maternal nurse could increase her operating hours and the kindergarten could run a three-year-old class.
She said they estimated renovations would cost about $650,000.
The group has received support from State Member for Bendigo East Jacinta Allan and Federal Member for Bendigo Lisa Chesters.
Ms Johnson said playgroups were beneficial to children and parents alike.
She said parents of young children were often isolated and that playgroups were an important way they could socialise.
"When you have a baby you miss adult conversation," she said.
"Many people here don't have family support as they're not originally from the area.
"But at the playgroup you can come and say, 'I've had trouble with this' and get advice.
Ms Allan said playgroups offered an important opportunity for parents to hang out with other parents.
"This whole district has a lot of young families," she said.