TREASURER Tim Pallas turned the first sod on the $250,000 redevelopment of the Lake Fyans project on Thursday.
The state government contributed $187,500 towards the project to boost tourism, create new jobs and support the Grampians region.
The project will develop a 9.6-kilometre walking track around the perimeter of Lake Fyans.
It will also include fencing, shade shelters, upgraded and new toilets, signage, nature trails and bird trails.
The project will generate nine construction jobs, three ongoing jobs and secure five existing jobs.
Lake Fyans contributes more than $7.7 million per annum to the economy, and the number of average visitor days spent at the lake is expected to increase from 75,000 to 100,000 once the works are completed.
The new track will help preserve cultural heritage locations and native vegetation in the southeast part of the lake shore by limiting motor vehicle and motorbike access to the water in highly sensitive areas.