Aviation Industry Minister Gordon Rich-Phillips was in Horsham on Thursday to announce the money.

Mr Rich-Phillips said the grant would upgrade the aerodrome's north-south runway.

He said other works included repair of pavements and seals and the creation of new and reconstruction of existing drainage lines.

Runway and taxiways line markings on the aerodrome's two runways will also be renewed.

"These are tangible improvements to this airport,'' Mr Rich-Phillips said.

He said the aerodrome was important to Horsham's community.

"It is essential for tourism, emergency services, agriculture and flying training purposes," he said.

Mr Rich-Phillips also mentioned the site's use as a base for aircraft involved in fire detection and suppression.

"It underpins how important a facility like the Horsham Aerodrome is to the Horsham community,'' he said.

"Horsham Aerodrome is a key economic asset to the region and is critical to emergency ambulance and fire-fighting operations, along with crop dusting operations that support local agribusinesses.''

Horsham Aero Club life member Ron Griffith welcomed the money.

He said it would help prevent flooding, which occurred after heavy rain.

"No one wants to taxi through great puddles,'' he said.

Mr Griffith said there were 17 private hangars and more than 35 private aeroplanes hangared or garaged at the aerodrome.

Club president Barry Lawes said the upgrade would ensure the club could use the aerodrome all year.

He said the upgrade would help with the upkeep of the north-south runway, which was recently sealed.

Wimmera Aero Club chief flying instructor Hugh Brownlee said the aerodrome was important for the city.

He said the upgrades would improve flying training at the site.

"It's a treasure,'' he said.

Horsham councillor Tony Phelan said 40 per cent of the municipal budget came from rates.

He said without funding from state and federal governments, works such as the aerodrome upgrade could not occur without hefty rate increases.

Cr Phelan said the funding would support several user groups.

"We're pretty proud of our aerodrome,'' he said.

Mr Rich-Phillips said the works should be completed in the first quarter of next year.

"These major upgrades will ensure Horsham Aerodrome can operate continuously to support emergency and general aviation services,'' he said.