Warrnambool would be home to a "world-first" porous boat ramp design as part of a $3.5 million project for the harbour precinct.
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A $420,000 state government cash injection this week gave the city council the green light to start detailed design works.
Mayor Tony Herbert said the first stage of the project would include the construction of two or three-lane boat ramp along with significant upgrades to the car park and stepped access to the beach.
Design work would also done on the breakwater, which is in urgent need of a $7.2 million "complete makeover", as well as a potential spur off the end of the breakwater.
Cr Herbert said that once designs were completed in about six months, council would then need to seek almost $11 million in government funding to start both projects.
He said that while he was initially in favour of an enclosed harbour, news that the breakwater was in such poor condition meant he now supported a more "realistic" option.
"How were we going to fund a $10 million enclosed harbour plus get close to $10 million for repairs to the breakwater?" he said.
"It was just one of those things that just looked and sounded unfundable.
"Our main priority is to consolidate the breakwater. That's the jewel in the crown down there."
Cr Herbert said a porous design for the boat ramp would allow the long wave, which was one of the main causes of the problem, to go through the ramp rather than push water up it.
"It's a bit of a world first," he said.
Cr Herbert said that if that design failed to make the launching of boats into the harbour considerably safer then they had no option but to build a spur off the breakwater. If it was successful, he said there would be no need to build the spur.
Cr Herbert said he had worked closely with the three main user groups - the coastguard, fishermen and yacht club - to get unified support for the first stage of the project.
Upgrades to the breakwater include a significant extension of the rock armour wall, rendering and repairs to cracks.
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