In addition to the five-year contract, Premier Will Hodgman will pledge a further $2 million to upgrade the 2.4-kilometre circuit over the next four years, boosting its reputation as one of the country’s most technically challenging tracks.

The V8 Supercars Series is the state’s biggest event in terms of crowd figures, with 55,000 spectators – including 3500 from interstate – injecting an estimated $5 million into the Northern Tasmanian economy each year.

Both Supercars representatives and Tasmanian motor sport fans had been cautiously optimistic of a new V8 deal after the government’s previous three-year agreement expired in March, with Mr Hodgman agreeing in-principle to keeping the event.

‘‘By agreeing to a five-year deal, we have been able to provide certainty for the future while delivering a more cost-effective outcome than a shorter agreement,’’ Mr Hodgman said.

‘‘We’re committed to building on our competitive strengths such as tourism to support and create jobs, which is why we have worked hard to secure the V8 Supercars Series for Tasmania.’’

V8 Supercars chief executive James Warburton celebrated both the decision and the planned circuit works.

‘‘This contract will ensure Tasmania retains the economic benefits of the biggest annual event in the state and, critically, includes long overdue circuit upgrades which creates a legacy for all motor sport,’’ Mr Warburton said.

The 2015 V8 championship calendar will be released in early September.