Several projects will be merged to streamline investment programs, and funding for federally recognised Black Spots will rise from $110 million to $150 million per year.
Infrastructure minister Catherine King said the Roads to Recovery funding will rise gradually from $500 million to $1 billion per year.
"Big roads and metropolitan highways might get a lot of the attention, but we spend most of our driving lives on local roads around where we live and where we work," she said.
The changes come out of the government's Independent Strategic Review of the Infrastructure Investment Program, with the growing costs of construction labour front of mind.
The minister for regional development Kristy McBain said roads are always a top concern for local councils.
"This will make a huge difference for councils outside of our big cities in particular, which have significant and ageing road networks under more demand than ever, as people flock to our regions," she said.
Ms King said the increases will be phased in over the forward estimates to avoid pressure on inflation.
"We are doing this in a responsible way, to give councils the funding they need while also ensuring the increase doesn't put pressure on inflation," she said.
Projects to be merged include the Heavy Vehicle Safety and Productivity Program and the Bridges Renewal Program, which will become  the Safer Local Roads and Infrastructure Program.
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