The twin-hulled vessel, a sister ship to the Geelong-Melbourne ferry Geelong Flyer, carried almost 110,000 passengers last year, including 15,000 in January 2023.
The $2.55 million investment will allow the service to continue carrying tourists and workers between the Peninsula and Docklands for at least another 12 months.
Minister for Public Transport Ben Carroll said the government was “backing regional tourism and local communities” by providing better transport links.
“The ferry to the Bellarine Peninsula provides another convenient transport alternative for the tens of thousands of visitors and locals accessing the service whether for work or holidays,” the minister said.
Bellarine MP Alison Marchant described the funding as a great outcome.
“The Portarlington ferry is a wonderful experience and an important transport link for locals and visitors,” she said in a statement.
“The ferry offers a gateway to our amazing Peninsula and strengthens tourism for our region, while also providing locals with a transport alternative to travel to and from Melbourne.”
The Bellarine Flyer was launched in 2017 and is capable of carrying more than 400 passengers.
The Portarlington-Melbourne service runs twice daily.