The Australian Government has formally approved $10 million funding to upgrade the Western Highway between Stawell and the South Australian border, matching $10 million from the Victorian Government.

Federal Minister for Infrastructure and Transport Darren Chester said the project would make trips through western Victoria quicker and more reliable, improve road safety through pavement and intersection upgrades, and reduce disruptions due to periodic road surface repairs.

"This $20 million upgrade was a 2016 election commitment to be delivered in partnership with the Victorian Government. We have now officially delivered our $10 million share, demonstrating the Australian Government's commitment to reducing road deaths across regional Victoria," Mr Chester said.

Victorian Minister for Roads and Road Safety Luke Donnellan said the highway was a critical connection for the state.

"The Western Highway links to other key freight routes such as the Midland, Sunraysia, Pyrenees, Henty and Wimmera Highways, so upgrading the highway from Stawell to the South Australian border is an important boost to freight and passenger connectivity," Mr Donnellan said.

Federal Member for Mallee Andrew Broad, who also chairs the Black Spot Committee for Victoria, said the safety element of the works would boost safety for freight operators and other motorists.

"Tragically, this section of the Western Highway has seen seven fatalities between mid-2011 and mid-2016, so the safety upgrades included in this project are of particular importance. The roundabout at O'Callaghans Parade in Horsham will be upgraded, and there will be more visible LED traffic signals and pavement improvements made at various locations through to the South Australian border," Mr Broad said.

Victorian Member for Western Victoria Jaala Pulford said the upgrade would keep western Victoria moving.

"Upgrades to the road surface will also mean fewer closures to maintenance, allowing the region's industries to cut costs and be more competitive in inter-regional and interstate markets."

Work on the upgrade is expected to begin later this year, with completion due in late 2020.