The Shed, which Castlemaine State Festival organisers took over in 2016 to use as a creative community space, is among eight projects that will be improved, budget papers released on Tuesday reveal.

Stage two of renovations is understood to include creative spaces including a performance area.

Other news from the budget:

The government set the money aside to enhance regional and community infrastructure, deliver greater access, support new exhibitions and improve collection storage in this years budget after a year in which the tourism sector was ravaged by coronavirus lockdowns.

The fund is part of a wider push to help support the industry through the pandemic.

Other projects to win funding for infrastructure include a new creative exhibition space at the former Kyneton Primary School, the Benella Gallery anbd Charlton's Rex Theatre.

The government will also use the funds to create a new collections care and storage program to enable the touring and safekeeping of collections statewide.

The Castlemaine State Festival has also received a separate $172,900 boost through a federal grant helping it host a COVID-safe festival in 2021.

It is part of $60 million in grants through the federal government's Restart Investment to Sustain and Expand fund aimed at boosting arts sector recovery.

The federal government expects to reveal the full batch of fund recipients in the weeks to come.