Logging of native trees will be phased out in Victoria over the next decade under a transition plan that will cost $120 million.

Key points: The announcement comes amid financial strain for the timber industry

The announcement comes amid financial strain for the timber industry Forestry groups said the plan would devastate rural communities

Forestry groups said the plan would devastate rural communities But environmentalists said the phase-out would take too long

The Andrews Government today confirmed the policy includes reducing the current level of native timber available for logging from 2024-25.

The Government also announced the imposition of an immediate ban on logging in old growth forest, which is about 90,000 hectares in size.

With dwindling supply already restricting the industry, all native timber logging will cease by 2030 under the policy.

Reduced supply will put a strain on thousands of jobs and put pressure on already struggling mills, and there will be money available as part of the transition away from a centuries-old industry.

The Victorian Association of Forestry Industries estimates more than 21,000 people work in forestry and the wood products sector and other studies have shown the native timber sector employs around 2,200 people.

The fate of the native timber industry has been a challenge for the Government for years. ( ABC News: Stephanie Anderson )

Australian Paper has a legislated contract for native timber supply from the state's Central Highlands under a deal passed by the Victorian parliament in the 1990s.

It runs the Maryvale Mill, which has up to 1,000 workers and is one of the largest employers in the Latrobe Valley.

It has previously welcomed government commitments to boost plantation timber.

The Government said the assistance package would secure the jobs at Maryvale until 2050.

Making the announcement at a tree nursery in Alberton, in Gippsland, Premier Daniel Andrews said every worker affected by the "challenging transition" would be supported, one-on-one.

"There will be pain and there will be challenges in this, but we will stand with every single community to provide the certainty and the support to make it through this tough transition," he said.

"Essentially we are going to replace those jobs currently employed with native timber, with jobs in planting, cutting down and hauling and processing plantation timber.

"That's the way this transition will be managed."

Forestry and government have been under increasing pressure in recent years over the future of the sector, with supply of sustainable sawlogs dwindling.

Timber is an environmentally and politically sensitive issue too, with the fate of the critically endangered Leadbeater's possum — Victoria's faunal emblem — linked to continued logging in the Central Highlands.

The Leadbeater's possum's critically endangered status has led to the creation of special logging exclusion zones. ( Supplied: Zoos Victoria )

Special zones stopping logging if a possum is detected in a timber coupe are in place.

Bushfires have also reduced the supply of hardwood timber.

The state-owned VicForests manages supply and sales of timber.

Its annual report showed it made a profit of just under $2 million last year, with the Government paying it more than $11 million in reimbursements for areas that were unable to be logged because of the possum.

The Toolangi State Forest near Healesville was once a native logging area. ( ABC News: Stephanie Anderson )

Taxpayers are already propping up the industry.

In 2017 the Andrews Government spent more than $60 million after it took the unusual step of buying a beleaguered timber mill in the Gippsland town of Heyfield, because it was threatening to close due to reduced supply.

Green groups have been lobbying the state for years for an end to native logging, pushing for the creation of a 'Great Forest National Park' in the Central Highlands, near Healesville.

Conservationists have argued that tourism would boost the economy.

They argue there is a major tourism opportunity that could create thousands of jobs, but the forestry sector warns that ending forestry will destroy the livelihoods of thousands in the regions.

Areas available for logging are also part of Melbourne's water catchments.

Scientists warn logging in catchments will reduce the state's water supply because logged areas soak up more water than forested regions.

Federal Government says native logging sustainable

Federal Agriculture Minister Bridget McKenzie condemned the Andrews Government's plans, arguing the industry was sustainable.

"It's a clean, green, sustainable, well-managed resource," Senator McKenzie said.

"The decision today shows that the Victorian Government doesn't care about these families in regional towns, 4,700 people will be out of work and this will have serious flow-on effects for the state's regional economy.

"Our beautiful natural hardwood is in demand and for good reason. It's a sustainable resource when managed well. The short-sightedness of this Labor Government is breathtaking."

The announcement included an immediate ban on the logging of old growth forests. ( Supplied: Wayne Heywood, file photo )

Those views were echoed by Victorian Nationals leader Peter Walsh, who said communities like Orbost would be "gutted" by the announcement.

"This will be absolutely devastating for many country communities," he said.

"Daniel Andrews is sacrificing country jobs just to keep his city voters happy."

The Victorian Association of Forest Industries said the plan would have a devastating impact on the many rural communities and heighten the mental stress on many families.

The Wilderness Society's Amelia Young said the decade-long transition was too long.

"Industrial foresters just want to take, take, take," she said.

"Victorians want their forests protected because they're concerned about wildlife facing extinction, water security, and climate change.

"It's important that the State Government support the logging industry, and its workers, through inevitable change, and it must also immediately protect special forests, stop logging in old-growth forests, and prevent extinction of wildlife found nowhere else on Earth, including the Leadbeater's possum and the greater glider."