Phase Four of the Local Roads and Community Infrastructure Program delivered $500 million for road spending to councils, and this latest announcement will top that up by an additional $250 million, Ms King said.

"We know many councils across the country are struggling to maintain and improve their local road networks - especially following repeated flooding and other natural disasters in recent times," Ms King said.

"We have listened to councils and are standing side-by-side with local governments to support them in their vital role in delivering critical infrastructure for their communities," she said.

Regional Development, Local Government and Territories Minister Kristy McBain said the additional funding would support councils planning for larger or more complex projects.

"I've met with close to 200 local councils since May last year, and the resounding feedback has been that this extension will enable them to progress their higher-priority projects - and now this work can commence," Ms McBain said.

Greg Kieser, mayor of George Town, which should receive an additional $192,142 from the announcement, said he had yet to be apprised of the funding decision.

"But we have a list of priority projects we are trying to fund, so an extra $200,000 would be most welcome to progress some of these top priority projects," he said.

Greg Howard, mayor of Dorset Council, also welcomed the news.

"We rural municipalities manage 85 per cent of the road networks across Australia, and we are grossly underfunded to do that, so any additional money is welcome," Mr Howard said.

But the announcement also prompted some criticism from the Australian Local Government Association.

ALGA president Linda Scott said the Albanese government's decision to restrict the funding to regional council roads was "disappointing".

Hobart, which was classified as the state's only urban centre, received nothing from the second phase of the funding package, which was restricted to road funding in eligible "non-urban areas".

Ms Scott said the government should reinstate former funding rules and let local governments decide which infrastructure projects to prioritise.

"Local libraries and sporting fields matter to communities, alongside local roads," Ms Scott said.

"Local governments are best placed to identify the locally-led infrastructure priorities in our communities and we urge the Government to reinstate the former funding model to ensure all councils - big and small - can access the funds we need to deliver important infrastructure projects," she said.

But Dorset's Mr Howard said the present rules reflected the fact that rural councils needed more road funding than urban ones.

"Funding for rural municipalities is more difficult, because you have got so much infrastructure for such a small number of people," he said.

"Launceston for instance has almost a tenth of the length of road to maintain per resident than what we do," he said.

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