Planning Minister Justin Madden announced the State Government had approved the plans for the project when he visited the school to mark Regional Planning Week celebrations last Thursday.

He said new planning provisions would allow the Government to speed up the approval of building works for schools in need of new educational facilities.

The new library, which will be funded by the Federal Government's Nation Building and Economic Stimulus plan, will benefit more than 80 students and create jobs in the Macedon Ranges.

Candlebark School, a unique education centre for children aged 5 to 14, is set on Australia's biggest education campus of more than 445 hectares (1100 acres) just north of Melbourne.

Mr Madden said the new library involved the construction of a 300-square-metre building.

"This library will assist Candlebark School in its commitment to the academic, social and physical education and encouraging a lively, good-humoured, challenging and stimulating classroom atmosphere."

Candlebark principal and author John Marsden said the library would be built into a hill on the school site.

"We try to be environmentally friendly and cause the least disruption to environment in every way. The best way to do that was to go into the ground.

"When it's finished, we'll put grass back onto the roof."

Mr Marsden said the library would also have shelter for bushfire emergencies.

"Because it is so deep into the hill we figure we can put bunker protection into the rear and so if we are ever in that situation we would be in relatively good shape."

Macedon MP Joanne Duncan said the project showed the importance of Candlebark School to the Macedon Ranges community and would help build a better future for Romsey children.

Mr Marsden anticipated the project would be finished by March next year.