All caravan parks have been closed since March 26 due to the virus, but the current lease expires on May 14 after Nola and Bill Turnbull decided not to renew for another three years.

A new tender can't be advertised until the upgrades are done.

Alpine Mayor Peter Roper spoke to Victorian Premier Daniel Andrews about the issue early in March.

"It's not a council asset, it's a DELWP asset, but as a community asset, obviously council would like to see it up and running," he said.

"We have many people who now live in our community who started coming to the caravan park for their summer holidays.

"We're working hard behind the scenes to get something to happen.

"The impression I got from the Premier prior to COVID-19, was in a bushfire-affected community, caravan parks offer a way for people to get into areas, and it's always a shame to see an accommodation provider close."

The septic system is failing and is not EPA-compliant, with more than $16,000 spent over Christmas to empty it daily.

Connecting the park to Tawonga's sewerage system and upgrading other facilities is expected to cost $2.1 million.

"We have to find the money for a start - it's too big an impost on the ratepayers of Alpine Shire - and that's why we've asked for some grant funding to get it back up and running," Cr Roper said.

"If we hadn't had COVID-19, I'm reasonably confident that we would have been successful in getting funding and I'm still hopeful we will get funding."

Unlike other caravan parks managed with council's involvement, there is no committee of management for the Tawonga site after it was disbanded.

DELWP Hume regional director Clare Kiely said DELWP recognised the important role the park plays "and is working in partnership with the Alpine Shire Council to consider a number of options for the future management of the park".

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A petition about the caravan park "facing closure" was started by Rachel Bendelle in January and has since been signed by more than 4600 people.

"My children like many others are the fourth generation from my family to holiday here," she wrote.

"Like many other families that have been coming here for over 50 years, we can't imagine spending our holidays anywhere else."

A state government spokeswoman said: "The Victorian government has received a funding request from Alpine Shire Council to upgrade the Tawonga Caravan Park, which is currently being assessed".