Tasmania's north-east is riding out of two decades of decline with major investment in cycling infrastructure.

The Federal Budget committed $1.47 million to pay for about half the cost of 70 kilometre rail trail from Scottsdale to Launceston.

The Dorset Council has approved a planning application for the rail trail from Scottsdale to Tonganah, and it will have carriage of the $3 million project.

North East Rail Trail Board chair Sarah Hirst said the project would bring the rail trail close to many farm and rural tourism ventures and spur new investment. Listen Duration: 5 minutes 17 seconds 5 m Listen Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. North East Rail Trail Board chair Sarah Hirst ( Rose Grant ) Download 2.4 MB

"In the 20 years the rail [line] hasn't been used, this is the main option that has been put forward, to convert it into a walking and cycling trail," she said.

"People can come into the area: they can sip, savour, explore, spend, and that's what it's really all about."

Mrs Hirst said rail trails were a proven way to attract visitors who really wanted to experience what local communities could do with their farms and local food, as well as beer, wine, spirits and water.

She said they also wanted to immerse themselves in the culture of rural towns.

As owner of the Leaning Church Vineyard at Lalla, Mrs Hirst said she was one of several businesses gearing up for more cyclists and walkers.

"Since (MHR for Bass) Andrew Nikolic made this announcement last night, my phone hasn't stopped," she said.

"We have just been inundated with people who want to move to the area, people who are already here who want to expand, existing businesses and those that want to start new ones.

"So we've already been told of a boutique brewery that is likely to start in Lilydale, people who are looking at new B & B's, people expanding existing accommodation options.

"So there are so many projects already on the table of people who are so excited that they can now expand their existing farms or businesses and really move into tourism."

The region is also hosting the National Mountain Bike Championships at the new Blue Derby mountain bike trails this weekend.