The state's regional development minister Mary-Anne Thomas says her government "requires" $4.4 million for upgrades by May 30 as the national government forms its new budget.

"The Victorian Government has committed $4.5 million to the expansion of the airport subject to matched Commonwealth funding which we expected to be confirmed last year," she told her counterpart Michael McCormack.

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The state government will consider looking at other options if the Morrison government does not agree to pay, the Bendigo Advertiser understands.

The City of Greater Bendigo wants to upgrade the terminal and add a business park to attract more airlines, tourists and business to the region.

It has committed $1 million to the project.

The state government's letter coincides with federal deliberations over what the upcoming federal budget will look like.

"Once matched funding is confirmed, the Victorian Government will provide funds in the 2020-21 and 2021-22 financial years," Ms Thomas wrote.

Ms Thomas wrote that the state government has already given the council extra time to get funding from the federal government.

The council has missed out on federal budget funding numerous times over recent years.

It has also applied for a number of federal grants and raised the matter when councillors and officers have travelled to Canberra.

The matter became a federal election issue in 2019 when Labor committed to funding the project in its unsuccessful bid for government.

At the time, the Liberal Party was open to funding but believed action would be "premature" given that work was still to be undertaken on other airport projects..

The 2020 pandemic dramatically changed the Coalition government's spending priorities.

The council had hoped the airport might get funding as the Coalition pumped money into shovel-ready building projects in the darkest days of the pandemic, but Bendigo's share went to other projects in the council area.

The federal government did set aside $465,000 last June to extend the airport's runway and allow planes of different sizes to be separated.

Ms Thomas told Mr McCormack that the airport was quickly becoming a commuter hub thanks to Qantas' recently established Sydney route.

Mr McCormack has been contacted for comment.

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