Sport and Recreation Minister James Merlino said the Dimboola Road ground would get a new drainage and irrigation system, drought tolerant couch grass playing surface, changing rooms, cricket nets and lights.

He said the upgrade would allow sport on the ground all year.

"The effects of the drought have forced us to think of new ways to keep sport alive in the face of climate change," Mr Merlino said.

"Today's funding is about giving the community more opportunities to get involved in sport and recreation, no matter what the weather brings."

Mr Merlino said the improvements would benefit more than 1000 college students and other sporting clubs.

He said the upgrade would provide lasting outcomes for the community, particularly Horsham Junior Cricket Association and Jung Tigers Cricket Club.

"The oval will also be used by local football clubs in winter to stop the overuse on Horsham Rural City Council's other fields," he said.

Mr Merlino said the grant had come from a $26-million surplus from the 2006 Commonwealth Games that had been allocated to grassroots sports.

Horsham Rural City Council environment and recreation services manager Pat Barrett said he hoped the upgrade would be finished in time for the 2009 football season.

"It gives us an opportunity to relieve Horsham City Oval from overuse," Mr Barrett said.

"It also helps the smaller sporting clubs like hockey and soccer that struggle for venues, as well as giving the school a better sporting facility."

Mr Merlino encouraged Horsham Rural City Council and local football leagues to apply for funding from the Country Football and Netball Program to upgrade Horsham City Oval to AFL specifications in order to host AFL pre-season games.

He said the program was designed for country grounds to upgrade their facilities.

Mr Merlino said his department had already started talks with the Horsham council about securing the funding.

The State Government has also delivered funding for drought projects at sporting venues in Ararat and Pomonal.

Ararat's Alexandra Oval and harness racing club and Pomonal Recreation Reserve shared $44,000 as part of the second round of the Drought Relief for Community Sport and Recreation Program.

Alexandra Oval will receive $27,000, Pomonal Recreation Reserve $9430 to introduce drought relief strategies and Ararat Harness Racing Club $8000 for a bore proposal.

Member for Ripon Joe Helper said the drought funding would be used for important work.

"At Alexandra Oval, the installation of a pump and piping will enable water from Alexandra Lake and grey water from sewage ponds to be mixed and brought to the oval in addition to the installation of moisture sensors and remediation works on the ground's surface," Mr Helper said.

"The Pomonal Recreation Reserve project will involve the upgrade of the reserve with a drought resistant turf."

"Ararat Harness Racing Club will sink a bore to enable the club to have its own water supply, thus saving the club and the local community 100,000 litres of water a month."