Mr Mulder said Federal Health Minister Tanya Plibersek’s announcement that the $2.9 million removed from the local health budget would be restored was positive for patients. 

“Bendigo Health can now continue to deliver high-quality health care to the people of the Loddon Mallee region without implementing the planned service reductions and asking our staff to take leave,” he said. 

Mr Mulder had said the cuts would have had a huge impact on patient care. 

Twenty-four beds were to close, the surgery waiting list was tipped to grow to about 1500 and $100,000 was to be cut from mental health services in outlying towns. 

All affected services will now be reinstated. 

“I wish to thank our staff, patients and members of the community for their support and co-operation during what has been a challenging period for the Bendigo Health team and I apologise for the disruption that this issue may have caused,” Mr Mulder said. 

Liberal candidate for Bendigo Greg Bickley said there had been a strong community backlash to the cuts, which this year totalled $107 million across the state.

“The anguish that has been inflicted on local hospitals, the boards and staff and patients, is nothing short of disgraceful and demonstrates the Gillard government’s total disregard for communities in central Victoria and the Macedon Ranges,” he said.

“Even in defeat, Labor refuses to accept responsibility for its own poor decision that had forced our hospitals to reduce services and staff.”

But ALP candidate for Bendigo Lisa Chesters said there appeared to be a misunderstanding about how the Commonwealth payments to the state were calculated. 

“It’s great news for Bendigo families, patients and the community,” she said. 

“The federal government has found extra money to put into our health system.

“If the hospitals haven’t understood how the formula works, that’s the fault of the state government, it’s their responsibility to pass this information on. 

“That’s why the money has bypassed the states and has gone straight to the hospitals.”

Ms Chesters said the states had signed off on the funding agreement.

Premier Ted Baillieu said the federal government had tried to “hoodwink the Victorian population” and deny any responsibility for the cuts.

He noted that the reinstated funding was only a short-term fix.Calls to Ms Plibersek’s office were not returned yesterday.

Member for Bendigo West Maree Edwards said the retention of $100,000 for on-call mental services in Castlemaine, Maryborough, Kyneton, Echuca and Swan Hill was welcome. 

“This is great news and will be a relief to many patients in regional areas who may need this service,” she said. Member for Bendigo East Jacinta Allan said Mr Baillieu should fully restore the state’s health cuts, which totalled $616 million.

Member for Northern Victoria Damian Drum said the federal government had backflipped on the cuts and that $368 million in Commonwealth cuts over three years was still to be restored.