The Victorian government will maintain funding for the Latrobe Valley Authority through the next two years as part of Tuesday's State Budget.
The Budget is providing $125 million to continue the LVA, but it is being funded out of the bucket of the Rural and Regional Victoria group.
Labor Member for Eastern Victoria Harriet Shing assured the LVA would continue to operate at its Morwell office, with chief executive Karen Cain staying at the helm and no staff losses.
The state government established the LVA in 2016 to administer the state government's $266 million Hazelwood transition fund, and provide financial support to community projects.
LVA funding was scheduled to expire on June 30, but the government extended it through to this State Budget as part of COVID-19 recovery measures.
"The LVA has been a success on the ground in the Latrobe Valley. It will continue to deliver worker support programs, and it will continue to do the work it's doing now," Ms Shing said.
"The LVA will continue to be a centre of government located in the Latrobe Valley, for the Latrobe Valley, rolling out programs and services to assist transition, growthand development."
Ms Shing hit back at suggestions the LVA would not continue its work under the Rural and Regional Victoria group, describing it as "cheap politics" and "unnecessary scare mongering".
LVA 2019 figures revealed it helped create 2500 new jobs and more than 2000 qualifications through partnerships with local registered training providers.
Gippsland Trades and Labour Council secretary Steve Dodd told The Express it was important the LVA's funding was continued to help provide partnerships to deliver training and worker support programs.
"I think it's positive the funding is going forward to help keep doing projects in the region, it's significant the work we've been doing to create jobs," Mr Dodd said.
"We use a range of partners and the LVA provides us with some support, we've been the training arm of the LVA."
However, Member for Morwell Russell Northe said he remained sceptical over how the authority would continue to operate as part of the Rural and Regional Victoria group.
He also questioned the LVA's capacity to enable approved projects to hit the ground.
"It still remains unclear what role they will continue to play and what programs will exist under their remit" Mr Northe said.
"It makes no sense that we continually hear of proposals that will be bought to the Valley and fall over, yet we have long approved projects in our community sitting idle which is ridiculous"
Nationals Member for Eastern Victoria Melina Bath echoed these concerns, fearing the LVA had been "buried" under the Rural and Regional Victoria group.
"Two years does not provide security for the region for jobs at the LVA or those in our local community," Ms Bath said.
"What was once a stand-alone entity with its own line item in the state government's balance sheet is now hidden in bucket of money which lacks accountability and oversight."
Member for Narracan Gary Blackwood accused the budget of moving the LVA from a "proactive agency supporting transition in the Latrobe Valley" to a "public relations department" for the Andrews Government.
Mr Blackwood said the government needed to clarify how much of the allocated $125m was going towards staff wages, and how much was going towards to delivering projects, investment and community support.