ST MICHAELS Primary School in Daylesford will be upgraded next year in time for the start of the 2008 school year.
The Catholic school received $75,000 from the Federal Government to upgrade furniture, computer equipment and build fencing and shade structures.
An extension of a classroom for general learning and an art and craft room is also part of the plans.
Principal David Baxter said the school was excited about the announcement.
"The whole school is very excited about it, it's great news for us," Mr Baxter said.
"To be able to upgrade all our computers is a huge boost for everyone," he said.
Mr Baxter said the school would implement the upgrades in Term 4, ready for Term 1 in 2008.
Victorian Senator Julian McGauran, who announced the funds, said the school would be much better off when the projects were completed.
"The Australian Government recognises the importance of providing schools with facilities that will enhance the education and well-being of students.
"The Investing in Our Schools Program builds on the $1.7 billion already allocated by the Australian Government for school capital works over the four years 2005-2008.
"The program will provide an additional $300 million in capital funding to Catholic and independent schools, as promised during the 2004 Federal election campaign, as well as $54 million of additional funding over 2007-2008."