Cash-strapped farmers facing another year of drought will have half their fixed water charges and council rates paid for by the Victorian Government under a $115 million drought assistance package announced on Monday.

In a package welcomed by farmers as "pretty handy", Premier John Brumby and Agriculture Minister Joe Helper announced today the Government would pay the first $1000 of fixed water charges and 50pc of the balance for all irrigators and stock and domestic farmers on less than 30pc allocation on December 1.

The rebate will be deducted from farmers' water bills by local water authorities and will not be available for publicly listed companies.

The Government would also spend $15m rebating half municipal rates bills for those receiving EC payments.

A Government spokesman said Gippsland farmers in zones where EC status had been withdrawn from September 30 but who had been receiving payments up until then would be eligible for the rates rebate this year.

Premier John Brumby said Cabinet had brought forward the drought relief package, given the urgent need for assistance for Victorian farmers in the grip of Australia's longest and hottest drought on record.

"It's vital that drought relief gets to where it is needed most and throughout sustained drought conditions our Government has continued to work closely with farming groups and rural cmmunities to ensure our drought assistance measures are well-targeted and effective," he said.

Victorian Farmers Federation president Simon Ramsay welcomed the package and said it had delivered almost all of the assistance sought by the industry.

"It's a pretty good package for farmers," he said.

Other drought measures include:

* $15m towards a 50pc rebate on municipal rates for those in EC declared areas receiving EC payments.

* $6m for on-farm productivity improvement grants

*$3.2m for drought extension support

*$10.2m for the CMA drought employment program

*$2m for the drought apprentice retention bonus

*$8.2m to help community sport and recreation groups drought proof facilities

*$2.9m for community support and drought mental health services