Victoria’s beleaguered recycling system has been given a $37 million lifeline aimed at cutting the amount of recyclable material that ends up in landfill and turning more of the state's waste into commercial products.

It is hoped the plan, to be announced by the Andrews government on Tuesday, will reinvigorate the local recycling industry, which fell into decline after Australia began to ship more of its recyclable waste to China.

A fire-prone recycling stockpile in Lara was the subject of a recent VCAT ruling. Credit:Justin McManus

Early this year China imposed stricter contamination thresholds on tens of millions of tonnes of imported recyclables, sending shudders through global recycling networks.

In Victoria, China's decision has contributed to the creation of hundreds of hazardous stockpiles of unwanted material and led to fears that millions of tonnes of recyclables would ultimately be dumped in landfill.