A RUTHERGLEN Wine, Walk, Cycle Trail creating a network of walking and cycle trails throughout the world–renowned wine region will be constructed following a $5.1 million grant announced by the Federal Government last Friday.

The massive capital investment was announced under the Federal Government's Building Better Regions Fund and will boost Rutherglen's COVID and bushfire impacted economy.

Indigo Shire mayor Jenny O'Connor described the announcement as fantastic news for Rutherglen and its surrounding communities.

"This is brilliant news for our shire, and in particular Rutherglen," she said.

"This investment will play a critical role in boosting our local economy, helping it to recover from the impacts of COVID19 and the 2019–20 bushfires.

"In the longer term, this new infrastructure will draw tourists to our region for many years to come.

"The Rutherglen Wine, Walk, Cycle Trail provides the opportunity to expand our shire's offering of walking and cycle tourism and recreation as well as a link from the Murray to Mountains Rail Trail to selected wineries, food producers, cafes and restaurants of interest which are not currently accessible via the existing trail.

"This project complements the existing Rail Trail and will showcase our world class wineries and food producers for both locals and visitors."

Chair of Destination Rutherglen, Damien Adams, said once the project is finished it will provide easy access to cyclists and walkers to visit wineries and other venues through a network trails in the North East.

"The 48 kilometres of new trails will be a key component of the cycling infrastructure," he said.

Wine Makers of Rutherglen executive officer Annalee Nolan welcomed the additional infrastructure.

"It's what we've been asking for over a long time," she said.

"It complements existing strengths of the wine region and tourism market."

Cr O'Connor said council was extremely grateful to the Federal Government for recognising the huge benefits that the project will bring to the North East and for allocating the funds to make it a reality.

"I also want to acknowledge the staff who put together an outstanding business case and to all the local businesses who've supported this concept since its inception."