As part of a $290 million support package, the state government will provide $29.5 million in funding to local councils to help them implement swift and streamlined permit, enforcement and monitoring processes to support expanded outdoor dining.

Metropolitan and regional city councils will be eligible for up to $500,000 in assistance with rural councils eligible for up to $250,000.

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Funds will be able to used to reduce or waive permit fees or invest in infrastructure such as streetscaping and lighting.

"We're the cultural and dining capital of our nation," Victorian premier Daniel Andrews said.

"That means, when it comes to reimagining what eating and entertainment means under COVID Normal, there's no one better equipped than Melbourne and Victoria.

"It will be our innovation, ideas and creativity that will help us find - and maintain - our COVID Normal."

Aiding the outdoor dining push will be the state government's Outdoor Eating and Entertainment Package.

It provide $87.5 million to councils and businesses outside of metropolitan Melbourne to create safe, practical and realistic outdoor dining experiences for summer.

Part of the package sees $58 million available in grants of up to $5000 to help hospitality businesses pay to bring their outdoor dining visions to life including umbrellas, outdoor furniture, screens and other equipment.

The grants will be available to licensed and unlicensed cafés, restaurants, takeaway food businesses, pubs, taverns, bars and clubs with a payroll of less than $3 million.

Last week, the City of Greater Bendigo said it was ready to support hospitality businesses who wanted to expand their outdoor dining options.

Under the third step of Victoria's recovery roadmap, restaurants and cafes will be able to offer outdoor dining with group limits of 10 and physical distancing.

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Council's director of strategy and growth Bernie O'Sullivan said staff were ready to meet with business owners to discuss options and fast track plans.

He said businesses could potentially expand along footpaths and into car parks and adjacent areas.

"We want to help businesses as quickly as possible prepare for the long-awaited reopening that we hope is not too far away," Mr O'Sullivan said.

"We encourage businesses to think creatively about how they would like to use outdoor spaces, there are some great examples where 'parklets' (dining spaces in car parks) have been beautifully decorated and really add to the appeal of eating out.

"There will be no restrictions on parklet designs, but they will need to be safe for patrons dining-in and also for pedestrian and vehicle traffic moving past, and be accessible for emergency services.

"Our aim is to make this process as simple and seamless for businesses as possible."