The government pledged $113,000 on Thursday for an eight- kilometre bicycle and walking trail from Natimuk to Mt Arapiles and a three-kilometre path from Natimuk to Natimuk Lake.

It is the first stage of a project to create a 26-kilometre trail to link Horsham and Mt Arapiles.

Natimuk to Mt Arapiles Bike Trail Project team member and Natimuk resident Greg Pritchard said the trail would be fantastic for the community.

He said a recently constructed bike and walking trail in the Natimuk township had been well used and he expected the new trail to be just as popular.

"When it is up and running it will attract a lot of people to the area," he said.

"People from all over Victoria will use it because it is such a scenic place."

The trail to Mt Arapiles will follow Natimuk Creek, Gladigau Lane and Arapiles Lane.

Dr Pritchard said Three Chain Road would not be part of the trail, following public concern over the effect the trail would have on environmental growth along the road.

Horsham Rural City technical services manager David Eltringham said it was `fantastic' that the Federal Government was matching a $100,000 contribution from council over three years.

Mr Eltringham said the planning committee was in the final stages of designing the trail.

He said there was no set starting date for the project, but anticipated construction would begin in coming months.

Minister for Infrastructure, Transport and Regional Development Anthony Albanese said he expected the project would create 10 jobs during construction, and would be of enormous benefit to the region's economy.

"We are building community infrastructure that will encourage healthier lifestyles among residents and create more sustainable communities," he said.

"By investing in better cycling infrastructure, the government is helping reduce carbon emissions by providing safe, alternative transport for residents."