Education Minister Nick McKim announced yesterday - the first day of term 3 - that Maydena would close at the end of the year.

He said $230,000 - from the $3.5 million School Transition Fund - would be spent on new uniforms, building works and ongoing support for about 20 pupils who will move to Westerway.

Over the next three years, the merger will save the Education Department $500,000.

``Ultimately, yes, there are savings to be made for the department, but this is not about savings. This is about delivering better educational outcomes and better social outcomes for the students of Maydena,'' Mr McKim said.

``This is an example of a school community taking responsibility for the future education provision for their kids.''

The two Southern schools are about 19 kilometres apart and, once merged, will have an enrolment of about 80 pupils.

Maydena principal Ben Richardson said the school community and staff - none of whom will lose their jobs - saw the amalgamation as being in the best interests of pupils.

Under the federal government's Building the Education Revolution program, $300,000 was spent on upgrading facilities at Maydena Primary.

Mr McKim said he had informed the Commonwealth of the amalgamation, and department staff would discuss community use of school facilities with the Derwent Valley Council and representatives of Maydena's school community.

Opposition education spokesman Michael Ferguson said yesterday's announcement proved the government's initial push for forced school closures was wrong.

In June last year, Premier Lara Giddings announced that 20 schools were earmarked for closure due to falling enrolments. 

The move was expected to shave $45.9 million from the education budget, but was abandoned after community outcry.

``As the Liberals have been saying for many years, it is school communities and parents which are best placed to determine what is best for their own school and students,'' Mr Ferguson said.