A decision by a central Victorian town to allow the building of its first ever mosque has split the community.

Bendigo Council approved the plans but some residents are so opposed to the mosque they have been waging an anti-mosque campaign.

There are reports several right wing anti-Islamic groups from across the country have been funding that campaign.

The Bendigo Bank has weighed in on the developments closing the account of an anti mosque group saying it took the decision after much consideration but essentially the bank wanted to do business with groups whose values aligned with their own.

Mosques in rural Australia are not new. The first mosque was built in Maree in rural South Australia back in 1860. Broken Hill also had a mosque.

ABC journalist Claire Slattery says people opposed to the mosque have been tying black balloons at places where supporters of the mosque live.

Riddy Ahmet is a member and past president of the Shepparton Muslim Islamic Society in Victoria. He says there was no community opposition to the building of a mosque in Shepparton back in 1960.

"The first Albanians arrived in Shepparton in 1928 so by 1960 we were part of the community and people knew about the Albanian community. We were farmers and part of the system," he said.

Mr Ahmet said the mosque was built on the outskirts of Shepparton on a dirt road and on the day of the mosque's opening, the council sent a truck with gravel to help pave the road.

But on the outskirts of north east Perth in semi rural Swan Valley, the Bosnian Islamic community has had to deal with community opposition to its plans for a mosque.

Sajit Smajic is the president of the Bosnian Islamic Society in Western Australia. He says his community bought a large parcel of land in the area eight years ago and in 2008 put in a proposal to build a mosque.

The local council received more than 140 submissions and almost all of those objected to the development.

"Most of the objections were about traffic and parking and noise," Mr Smajic said.

He said the Bosnian Islamic Society held meetings with the council over a six month period and in June 2010, the council overturned its objection to the mosque.

As part of the mediation talks the Bosnian Islamic Society agreed to scale down the size of the mosque by 40 per-cent.

"We really wanted to be co-operative in all aspects. We hoped to convince the council we were not a threat and focussed on showing we were complying with all the requirements," Mr Smajic said.