Animal rescue organisation, Port Stephens Koalas, will receive $3 million dollars to go towards a new koala hospital.
It is hoped the hospital will take the burden off local volunteers, who, up until now, have been operating out of their own homes.
Port Stephens Koalas Care and Rescue Coordinator Simone Aurino says having adequate facilities will mean more progress can be made.
"We need to contribute to conservation in many ways and without a central facility, it makes it very difficult for us to do this," she says.
However, Ms Aurino says getting the government on board has not been an easy process for volunteers.
"This has been an absolute mammoth task- it's not something that has happened overnight, we've had a team working on this project dedicated solely to this for several years," she says.
"They've had to really petition the government, supply all the supporting data that really shows why this should move ahead, and it's brilliant that it's finally being recognised."
$20 million dollars has also been allocated to purchase land for preservation.
It comes after six hectares of the Mambo Wetlands was sold last year, which is prime koala habitat.
Port Stephens MP Kate Washington says the funding is long over due.
"We've been critical of the government in its delay on even releasing its koala strategy," she says.
"Whilst that's been delayed, we've seen our koala numbers plummet."
Ms Washington says she hopes the government will consider buying back the section of the Mambo Wetlands which was sold for $250 thousand dollars last year.
"We are renewing our calls heartily for the government to spend some of that allocation of funds to returning the Mambo Wetlands to public hands."