A dangerous intersection will be upgraded early in the new year, the state government says after a third crash at an intersection in Toolleen.

Plans will likely include "splitter islands" separating traffic lanes, rumble strips and layout improvements.

Design work on the $300,000 project is "well and truly underway" at the intersection of the Northern Highway and Axedale-Toolleen Road, road minister Jaala Pulford said.

A two-car collision this morning left several people hospitalised, a dead dog and debris spread across the Northern Highway intersection.

It also prompted member for Euroa Steph Ryan - whose electorate includes Toolleen - to call for immediate government action 10 months after writing to Ms Pulford.

Ms Pulford said Regional Roads Victoria sent crews to the intersection earlier this month.

"We won't take lectures on road safety from the National Party, who oppose life-saving wire-rope barriers and spent less than half what we have on road maintenance," Ms Pulford said.

Five crashes have been recorded at the intersection over the past decade.

RRV earlier this year moved to improve line marking visibility and worked with the Campaspe Shire Council to change signage.

Update, 3.00pm

A dog was killed in this morning's crash.

The animal was restrained in the back of a ute travelling north along the Northern Highway when the collision occurred, the Campaspe Highway Patrol's Kris Sutton said. The dog had been restrained legally.

"Police are still investigating the cause of the crash," Leading Senior Constable Sutton said.

A Subaru sedan was travelling east along Axedale-Toolleen road when it and a Toyota LandCruiser collided, he said.

"Both vehicles were carrying trailers and the force of the impact forced them to become detached, with debris falling across the road," Leading Senior Constable Sutton said.

Update, 2.10pm

Euroa MP Steph Ryan wants immediate action after this morning's two-car crash in Toolleen.

Residents have been calling for action since two serious crashes at the intersection of the Northern Highway and Toolleen-Cornella Road in the space of nine days last January.

"I have previously written to the roads minister regarding the government's plans to improve the safety of intersection following two separate collisions in January this year," Ms Ryan said.

"In her response, the minister advised that Regional Roads Victoria were currently developing a safety improvement proposal for the intersection. That was almost 10 months ago and no major changes have been implemented."

Minister for roads Jaala Pulford used a letter to Ms Ryan in March to say a road safety improvement proposal was being developed, which would be considered in "future funding programs".

Ms Ryan supplied the letter to the Bendigo Advertiser.

How two crashes unfolded within nine days of each other in Toolleen:

"Last month, I again wrote to the minister and asked her to clarify the government's plan to improve the intersection," Ms Ryan said.

"The Andrews Government must immediately act to address the Cornella-Toolleen Road and Northern Highway intersection to help prevent future collisions and ensure the community's safety."

Ms Pulford and Rural Roads Victoria have been contacted for comment.

Update, 9.40am

TWO people have been taken to hospital in a stable condition following a two-car crash at Toolleen.

An Ambulance Victoria spokesperson said a man and a woman aged in their 70s were taken to Bendigo hospital.

Paramedics treated another two people at the scene.

Earlier

Paramedics are treating four people after a two-car crash at Toolleen, east of Bendigo.

The smash happened at the intersection of the Northern Highway and the Axedale-Toolleen Road about 7.45am.

Police, ambulance and fire crews are on scene.

More to come.

Have you signed up to the Bendigo Advertiser's daily newsletter and breaking news emails? You can register below and make sure you are up to date with everything that's happening in central Victoria.