The Emerald hospice will get $479,000 a year for two years through a National Carers Respite Program.

Fernlea House program director Helen Pike is thrilled that the service can continue.

"It's been an extremely difficult 12 months.

"Although we've always been very positive, because we know the value of what we do, it's very hard to provide day-to-day services without security. Our volunteers and the community have worked so hard to make this happen."

The funding will enable Fernlea to expand its day-care service and restart a five-day-a-week home palliative-care service.

"We're now able to increase our services with adequate staffing and facilities," Ms Pike said.

Rotary Club of Belgrave president Carl Robbins said the success was a good example of the community working together.

"A group of people with a common mind managed to achieve a common goal.

"It's good to see, because a lot of the place runs by volunteers - they're as important as the funding itself. Without them, there's no house anyway."

La Trobe MP Jason Wood said he was relieved Fernlea House could continue. "It's very pleasing. I congratulate the community on fighting to save Fernlea House.

"It shouldn't have come to this [last-minute rescue]. Twice we've had to fight like hell.

"I can absolutely assure you, if the community sat back and did nothing, funding would be cut and Fernlea's future would be in strong doubt."

Lyster Ward councillor Samantha Dunn welcomed the rescue.

"It's fantastic for a volunteer-run service to be able to continue to provide its valuable service."

A spokeswoman for Minister for Ageing Nicola Roxon said the funding would enable Fernlea House to expand its respite services.

"It will help Fernlea House provide much-needed support for those looking after loved ones with a terminal illness.

The National Respite for Carers program funds more than 600 community-based respite services across Australia.