Millions of dollars earmarked for reducing Tasmania's native forestry sector are to be spent on rebuilding it.

After dismantling the forest peace deal, the State Liberal Government has set about rebuilding the native forestry sector.

From tomorrow, forestry contractors can apply for a share of $4 million that was originally earmarked to help them leave the industry.

About 90 contractors received exit grants that were offered from 2010 under the forest peace deal.

With the industry ramping up since the Liberals took power, many contractors who remained found themselves going into debt to buy equipment and hire more staff.

Resources Minister Paul Harriss expected 12 to 15 operators to apply for the current grants.

"About $7 million in exit funding that wasn't allocated is now being spent rebuilding the native timber industry," he said.

Millions used to clear contractor debts

Fourth-generation contractor Adrian Bennett from Ranelagh in the Huon Valley is the kind of contractor the Government hopes will apply for assistance.

Mr Bennett said he had accrued more than $1 million of debt increasing his capacity to truck timber to export.

"We've sort of spent all our savings on getting ourselves up and going and increasing," he said.

During the recent turnaround of the native forest sector, Mr Bennett's company doubled its haulage capacity to 80,000 tonnes.

Mr Harriss said of the $7 million exit money $4 million would go towards debt reduction and the remainder would be kept in reserve.

"This will help forest contractors who have contracts with Forestry Tasmania manage their debt and launch into the regrowth of the industry," he said.

Contractors who used exit money to leave the sector would be allowed to buy their way back in but only using their own money.

"There'll be no double dipping in this exercise," Mr Harriss said.

The Government hoped the money would start flowing immediately.