The Federal Government has announced a $76 million recovery package in response to this summer's bushfires, with Prime Minister Scott Morrison saying Australian tourism is facing "its biggest challenge in living memory".

Key points: The recovery package includes funding to attract domestic and international visitors

The recovery package includes funding to attract domestic and international visitors While money has also been allocated for grants for "new attractions" in bushfire affected regions

While money has also been allocated for grants for "new attractions" in bushfire affected regions The Australian Tourism Industry Council estimates the bushfires have cost the country "hundreds of millions" of dollars

Mr Morrison described the funding — drawn from the Government's national bushfire recovery fund — as an "urgent injection" of funds for businesses impacted by the bushfire crisis.

The Australian Tourism Industry Council has estimated the bushfire crisis has cost the national industry "hundreds of millions" of dollars and damaged Australia's brand internationally, with a perception "the whole country's on fire".

The crisis has led to the highly publicised 'Matesong' tourism campaign being paused in the UK as well as the United States upgrading its travel advisory for Australia to "level two" — warning Americans to "exercise increased caution".

This week, the Australian Tourism Export Council told the Australian Financial Review cancellations by tourists from large markets such as the US, UK and China was hurting the industry and could cost the country at least $4.5 billion by the end of the year.

The Government's package includes $20 million for marketing to domestic travellers and $25 million for a global tourism campaign to advise international visitors that Australia is "safe and open for business", as well as $10 million towards creating new attractions in bushfire affected regions of the country.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 3 minutes 10 seconds 3 m 10 s The Tourism Australia ad 'Matesong' was pulled from UK screens

"Australian tourism is facing its biggest challenge in living memory," Mr Morrison said in a statement announcing the funding package.

"One in 13 Australian jobs rely on tourism and hospitality, so our $76 million investment is an urgent injection to help all those hotels, restaurants and cafes and tour operators get back on their feet.

"This is make or break for many businesses and tourist hot spots and not just in those areas directly hit by the bushfires.

"This is about getting more visitors to help keep local businesses alive and protect local jobs right across the country and especially in those areas so directly devastated such as Kangaroo Island and the Adelaide Hills, the Blue Mountains and right along the NSW Coast and East Gippsland in Victoria. "

The funding will provide grants of up to $1.5 million per project for events such as concerts and festivals — as well as permanent attractions such as art installations and tourist walks — in fire-affected regions, with the worst-impacted areas to be prioritised.

The package also includes funding to encourage international publicity for Australia's tourism industry and spread the message that Australia's educational and export sectors are still open for business, as well as drive attendance to the Australian Tourism Exchange.

Industry welcomes funding but warns of tough times ahead

The tourism industry broadly welcomed the Government's announcement, but warned there was a long road ahead for businesses doing it tough.

"People are believing everything they see on social media — the country's on fire, top to bottom, coast to coast, don't go to Uluru because it's on fire, Sydney airport's on fire — crazy stuff," Margy Osmond from the Tourism and Transport Forum said.

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"We have an enormous international problem, in terms of how people are now viewing us.

"We're going to have to do another big piece of brand work, but I think that's a bit further down the track."

Early figures from Tourism Australia showed international bookings were down by between 20 and 30 per cent for the first fortnight of 2020, with visitors from the United States, the United Kingdom, Canada, Germany, France and China among those choosing to stay away.

As with most of the money being announced for fire recovery, the response across the political spectrum has been welcoming.

However, the Greens argued damage to the tourism sector was another example of the Coalition's mismanagement of the bushfire crisis.

Greens leader Richard Di Natale said the Coalition had repeatedly ignored warning signs about the threat of fires, and the deaths of hundreds of millions of animals was just one consequence.

"We've got a huge social and health crisis on our hands, with the impact of poor air quality, which won't be known for years to come," Senator Di Natale said.

"What we've seen is a catastrophe — it is unprecedented, but unprecedented doesn't mean unforeseen."

The threat posed by the bushfires to the country's tourism industry has inspired Australians to launch their own community-driven campaigns to encourage people to go back to impacted areas, such as a video by Batemans Bay businesses urging Canberra residents to return to the South Coast of NSW.

The community campaigns come on top of hundreds of millions of dollars donated to charities by the public, celebrities and philanthropists.