About 30 people witnessed the turning of the first sod on Monday to signal the start of the redevelopment, set to take up to 14 months.

Managed by Major Projects Victoria, the northern wing will be demolished to make way for a state-of-the-art relaxation pool, salt pool, spa couch and steam room, while the southern wing will be completely refurbished into 12

baths and therapy rooms.

A pedestrian bridge will provide universal access to a first floor reception area incorporating a lift.

There will be more efficient pool filtration systems and other fittings to ensure sustainable use of town and mineral water, a 65 per cent increase in pool areas, rainwater collection from the roof area and new trees.

Hepburn Shire Council mayor Heather Mutimer said after many years of planning, periods of controversy and uncertainties, the final point of building had begun.

"At times, as we all know, it hasn't been easy and it's needed a great joint partnership of council, other levels of government and community pulling together to achieve a way forward," she said.

Representing State and Regional Development Minister John Brumby, Ballarat East MLA Geoff Howard said the redevelopment would provide a major boost for the local economy.

"It will ensure the new complex becomes an international mineral spa attraction well into the future," he said.

"The redeveloped bathhouse will complement the existing tourist facilities in the Hepburn region which is recognised for its attractions including great restaurants, wineries and galleries."

Ballarat company Nicholson Construction was awarded the building contract earlier this month. It will use up to 60 tradespeople on site at the peak of construction.

Funding was provided by the council, Victorian Mineral Water Committee and the Australian Government under its Regional Partnership program.

Independent MP Dianne Hadden said she would be "keeping a very close eye" on the redevelopment.

"It's a lot of money put into one business when other businesses are not given an equivalent sum of money to boost or redevelop their businesses," she said.