THE MANSFIELD Shire Council has confirmed the tender for the Mansfield Historical Society's new museum, with Indi MP Dr Helen Haines announcing $1.23 million in federal funding.

Dr Haines travelled to Mansfield last Wednesday and announced the federal funding alongside Mansfield Historical Society members, the mayor and representatives from Mansfield Community Bank, council, and the wider community.

The group gathered outside the Mansfield Historical Society, the future site of the new museum.

"This is a really important federal grant because it's open to the local government to spend on projects they think are worthy and important," Dr Haines explained.

"Many grants are tied to a particular area, but this is a perfect grant because the council can really assess the projects the community has put forward.

"This [historical museum] has been on the wish list for Mansfield for a very long time and I think this is an ideal example of what federal grants can do for local communities."

The Mansfield Shire Council received the federal grant as part of the local roads and community infrastructure fund.

Council Chief Executive Officer Kirsten Alexander thanked the Mansfield Historical Society and other involved partners for their hard work.

"I'm really pleased that we've got there, and we can show history through time," she said.

Mayor Cr James Tehan commended Ms Alexander for her efforts and said the council will endeavour to "hold the building progress accountable".

"We want to start it [the museum] on time and finish it on time," he said.

Mansfield Historical Society Secretary Ann Ware said the society has been advocating for a museum for 30 years.

"Having a historical museum would have been an unbelievable dream for the original people that formed the society," she said.

She and fellow society members have worked tirelessly with Museums Victoria to understand the metrics behind running a registered museum.

Ann said she was glad the council had seen the potential for a museum "that displays more than one aspect of our history".

Dr Haines also emphasised the importance of showcasing history to the community.

"This [the museum] tells the story of where we have come from, who we are, and where we are going," she said.

"I think connection to place is so important in rural towns.

"There are people who have lived in Mansfield all their lives, people who recently arrived here, and our traditional owners who have been here for a millennia.

"Everybody has a place and everybody can find a connection."

Dr Haines also addressed the proposed museum's benefits for the tourism industry.

"People who have never been here can start their visit to Mansfield by getting an understanding of who the people are, what their stories are and what the place is about."

Dr Haines said the connection to First Nations people will make the museum "a very special place in Victoria".

Prior to the museum announcement, Dr Haines held mobile office sessions in town and invited locals to discuss their ideas and concerns with her.

She later visited Highton Lane, Rifle Butts Road, and Chapel Hill Road.