Environment and Climate Change Minister Gavin Jennings said the funding, added to the $5 million provided last year to begin improvements to Port Phillip and Westernport Bays to ensure they remained vibrant places for Victorian businesses and the community.

"The Brumby Labor Government is taking action with this funding to ensure Melbourne's bays remain an important part of our economy and continue to provide recreational activities for many Victorians now and into the future," Mr Jennings said.

He said $2.23 million has been allocated for immediate upgrades such as improving car and trailer parking at boating facilities, maintaining safe navigation and access at popular launch locations and the reconstruction of the wall and wharf areas at locations such as St Kilda, Patterson River and Queenscliff.

The remaining $1.77 million would be used to develop the Brumby Labor Government's Maritime Precinct Plan, outlined in the Bays and Maritime Initiative, which has designated a network of maritime precincts at Frankston, Geelong, Hastings, Hobson's Bay, Mordialloc, Mornington, Patterson River, Portarlington, Queenscliff, St Kilda, Stony Point/Cowes and Wyndham.

"The Brumby Labor Government's vision for the bays identifies key maritime precincts that will be developed as activity hubs with improved public spaces and better access to recreational and tourism opportunities on land and water," Mr Jennings said.

"These maritime precincts will be vibrant destinations, reinforcing Melbourne's Activity Centres. They will be connected with public transport and walking and cycling paths and will be great places to visit whether from land or from the water's edge.

"Precinct renewal is critical to ensuring that recreational activities such as boating and fishing and industry such as aquaculture and boat manufacturing have appropriate access to water, infrastructure and markets."

Parks Victoria has been named the lead agency within the Victorian Government to coordinate concept planning, delivery and management in the maritime precincts and will work with work with local governments and other key stakeholders to prepare the areas for eventual private investment opportunities.