COUNTRY Victorians have reclaimed their local show and race-meet holidays.

After pressure from struggling communities, the Victorian Government has backed down on laws that dictated when shires could allocate a local holiday.

Those laws saw many small communities lose their show or cup meeting holidays, with councils allowed to allocate only one shire-wide public holiday.

Up to 20 shows and country race meetings faced extinction as they lost their holidays to larger events in their shires.

But in a backflip this week Small Business Minister Joe Helper will now allow councils to reinstate split public holidays within their shires.

Mr Helper met with councils last month and plans to write to regional councils this week asking them what holidays they want.

"I have obtained advice that there is room under our legislation to allow councils, if requested and approved, to split public holidays within their shire so local events are celebrated accordingly," he said.

"So we will work with local councils throughout early next year to ensure this can happen.

"We have listened to regional Victorians who have expressed some frustration about the current arrangements and we are working to rectify it."

Councils and show and racing committees have campaigned hard for the arrangements to be changed and are thrilled with their success.

"Exceptionally good news" was how Yarriambiack Shire Council chief executive Ray Campling described the changes.

"It's really going to give shows in rural areas like ours a chance again," he said.

"The ramifications that the loss of local show holidays had on our region this year were huge.

"Schools had to organise excursions or student-free days, and there was a degree of truancy where schools couldn't do that.

"Not having local holidays was a real, severe threat to our traditions of shows, which allows people - particularly the farming community - a rare chance to get together."

Mr Campling said there were five shows in his shire that this year had missed out on public holidays - Rupanyup, Warracknabeal, Hopetoun, Minyip and Murtoa.

The changes affected attendance numbers, encouraged children to wag school for the day and put more pressure on over-worked volunteers.

But now, Mr Campling said, it was likely they would all have their public holidays reinstated next year.

"Many of our shows have been going for a long time, more than 100 years, and are such an important event for the community, which also brings in very welcome dollars from outside," he said.

"I'd commend Minister Helper for listening to the needs of rural communities on this issue."

Yarriambiack Mayor and Warracknabeal Agricultural & Pastoral Society secretary Jean Wise was very pleased show day would again be a holiday.

"Shows are one of the very few events that everybody, all age groups, can attend and enjoy," she said.

Macedon Ranges Mayor John Letchford, who campaigned hard for the holiday legislation to be changed, said the Government was making a "fantastic move".

Mr Letchford's council this year refused to abide by the new law and declared a split public holiday in its shire.

Part of the shire had a holiday for the Kyneton Cup, while residents in the remaining area had the Melbourne Cup day off. The move defied the legislation, which stipulates the entire shire must have the same holiday.

Mr Letchford said businesses in Kyneton closed on the local cup day, and attendances were up, in a show of community support for the local event and its holiday.

Now, Macedon Ranges expects to formally reinstate the spilt holiday arrangement.

"So this decision is a cause for celebration for us, and will give employers and employees, school and parents, certainty about what they should do for these holidays," he said.

"We really appreciate Minister Helper listening and reviewing the decision.

"It is not an ideal thing for local government to be in defiance of the State Government, but in a case like this we have to advocate on behalf of our community, and yes, it has shown to be worthwhile," he said.