Indigo Council mayor Jenny O'Connor welcomed this week's announcement of $2.5 million to develop the town's old municipal building into a community hub for kindergarten, childcare and library services.

"It's very exciting because this comes out of the Chiltern Placemaking Project that we did a number of years ago," she said.

"This is a really great outcome and means we can get on with building this centre that will provide a whole bunch of services for the community."

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The council was expecting to have a drawn out funding application process, and have to contribute some money itself, but will now be able to get started quickly.

Plans have already been prepared and will soon go out for community consultation, with the hopes of employing North East contractors.

"We're very mindful of the fact our economy has suffered enormously since the beginning of this year and anything we can do to support our local businesses is absolutely our aim," Cr O'Connor said.

"It will be a modern facility with great meeting space, the latest technology, providing really critical services because we want to attract families to come and live in Chiltern.

"But we are also mindful that this is a beautiful little heritage town, so we'll be working with the community to get that balance right."