Principal Judy Hilbig said the project, funded by the State Government's Building Futures Rural Replacement Program, would be essentially a whole new school.

"The old school is being totally refurbished and it should be ready to be used by second term," she said.

"For the past couple of years the students have been predominantly taught in portable classrooms.

"The completion of this new building is very exciting for us."

Mrs Hilbig said the new building for the school's 28 students would provide more space and flexibility.

"It will give us more room to move, which will create opportunities for teachers," she said.

"As part of the project the students will receive a new playground, which they are quite happy about."

She said having all the rooms in the building including classrooms, toilets and offices under one roof would be convenient.

"It means the students won't have to run through the rain to go from one building to another," she said.

Mrs Hilbig said the new building would establish the primary school in the Halls Gap community.

"It's a lovely environment for the students to attend school," she said.

"The Grampians are the students' playground.

"The whole community is excited, because the school is an important resource to families."

The project started in mid-2011.