The future of Australia's richest and most prestigious footrace, the Stawell Gift, is in jeopardy after a lifeline from the Victorian Government was rejected by the athletic club in charge of the event.

Key points: Future funding for the event is dependent on changes being made, including a new committee to run the gift

Future funding for the event is dependent on changes being made, including a new committee to run the gift The Stawell Athletic Club rejected the offer but insisted the event will still run

The Stawell Athletic Club rejected the offer but insisted the event will still run The mayor of the Northern Grampians Shire said he was disappointed the "gold-plated" offer was rejected

The Easter weekend carnival features the gift, a handicapped race over 120 metres run on grass that has been held every year, except for four, since 1878.

The event has struggled in recent years.

This year the Andrews Government provided $138,000, but said future funding was dependent on changes to the event being made, including a new shared committee of management to run the event.

Last year, Dhruv Rodrigues Chico won the men's race at the annual Easter event. ( ABC News: Patrick Rocca )

In November, the state offered $280,000 to support the 2020 race and implement the new operating model.

But the Stawell Athletic Club (SAC) rejected the offer, leaving supporters of the race dumbfounded.

Former winner and club patron Luke Versace resigned from the SAC in disgust.

"Crucially, it is the club's inability to share or cede control in areas it has previously had full autonomy, in exchange for lifesaving funding which has prevented a deal from being reached,'' Mr Versace wrote in an open letter.

"From my perspective this is completely unacceptable and an unjustifiable betrayal of both the history and future of an event that means so much to so many."

Mr Versace warned that if a deal was not reached soon "the Stawell Gift as we know it will be forever gone" because it will lose its broadcast slot with Channel 7, with a drastic reduction in prize money and the event's iconic status.

'Gold-plated' offer rejected

Alexia Loizou took out the $40,000 prize when she won the 2019 Stawell Gift. ( ABC News: Patrick Rocca )

Club president Neil Blizzard told the ABC the club wanted to try and work with the Government and wanted more clarity on some proposals.

He denied the rejection was about the club retaining control.

"We are working towards the actual longevity of the club,'' Mr Blizzard said.

"The event is not in doubt, it will still run."

Mr Blizzard conceded it was hard to get sponsorship and said "we really don't know the next step at this stage".

Sports Minister Martin Pakula said the Government was proud of its support for the Stawell Gift, including providing more than $700,000 towards the event since December 2014.

"It remains open to the Stawell Athletics Club to accept the review recommendations and associated funding support," Mr Pakula said.

"The Government will continue to work with the Victorian Athletic League to support professional running in Victoria."

Northern Grampians Shire Mayor Murray Emerson said the council was very disappointed.

"It's a gold-plated offer from the Government,'' Cr Emerson said.

"I don't know how they could reject it."