The Department of Sustainability and Environment planned to burn wetlands in the upper tributaries of the Coliban River near Trentham.

An action group, Stand Up for the Coliban, was involved in the protest.

Community members concerned about the burn-off set up camp in the area to stop the burn.

Group spokesman Dave Stephens said the wetlands were classified as vulnerable because more than 70 per cent of its vegetation type had been lost since white settlement.

He commented on the State Government report released last week highlighting the state of Victoria's natural ecosystems and waterways.

In the report, Sir Gustav Nossal said the state needed to "find new solutions to protect riparian zones (waterways and wetlands) on Crown and privately owned land".

Mr Stephens said instead of burning wetlands several kilometres from Trentham every five years, a new and "far more strategic approach" would be to concentrate resources, reducing fuel loads in and adjacent to Trentham each year or two.

"For a start, DSE could control the large areas of highly flammable weeds growing directly on the edge of Trentham that are far more of a risk to the town," he said.