The federal government has announced $28 million in funding to improve water quality in Tasmania's Macquarie Harbour — the only known location of the endangered Maugean skate.

The skate, a prehistoric fish whose last known habitat is shared with salmon-farming operations in the harbour, faces a risk of extinction due to declining water quality and low oxygen levels, partly caused by aquaculture.

In a statement, Prime Minister Anthony Albanese said it was "essential we have a sustainable [aquaculture] industry".

"The Tasmanian salmon industry is the backbone of many regional communities and it's essential we support the thousands of jobs it creates right across the state," Mr Albanese said.

The Albanese government said $21 million will go towards improving and scaling up oxygenation in Macquarie Harbour to "help offset the effects of human activities".

There are 11 salmon farming leases held in the harbour — operated by Petuna Aquaculture, Huon Aquaculture and Tassal.

Other remediation efforts include "sediment remediation and research on the effects of historical mining".

Another $5 million will go towards the Maugean skate breeding program, while another $2.5 million will be put towards population and environmental monitoring for the fish.

The federal government said it would also conduct community engagement in Strahan and fund further environmental monitoring "to better understand the ecosystems and health of Macquarie Harbour".

'Cynical' pork barrelling, environmental group says

Environment group Neighbours of Fish Farming (NOFF) said the funding announcement was "a flagrant act of pork barrelling".

"This is money that should be put into helping the West Coast community transition to sustainable jobs, to supporting the people of the region rather than into the pockets of cashed-up multinationals," NOFF vice-president Lisa Litjens said.

"It's a cynical effort to buy votes in a vulnerable electorate with a federal election looming before the middle of next year."

Tasmania's Business, Industry and Resources Minister, Eric Abetz, said while the state government welcomed the funding, it "failed to provide much-needed certainty" for workers and families who were reliant on the salmon industry.

"It appears that Labor is more interested in backing Greens-led sensitivities than real jobs," Mr Abetz said.

"There is absolutely no reason the Prime Minister couldn't have announced these jobs would be saved, today."

Decision yet to be made on threatened species listing

The federal government has yet to decide on whether it will increase the threatened species listing of the Maugean skate to critically endangered.

It was expected to make a decision last month, but that decision has been delayed until after the federal election, after the Threatened Species Scientific Committee last month requested a time extension until October 30, 2025, to make its recommendation.

Federal Environment Minister Tanya Plibersek warned last year that efforts to save the endangered skate could temporarily halt salmon farming in the region.

Last week, the federal environment department said it would provide advice about whether to review the expansion of salmon farming in Macquarie Harbour in the coming months.

Ms Plibersek has been considering a request from three groups — the Australia Institute, Bob Brown Foundation, and the Environmental Defenders Office — to review a 2012 decision under the Environment Protection and Biodiversity Conservation act (EPBC) allowing the expansion of salmon farms in the harbour.

She has not provided a timeline about when she will make her decision.

The delay to the endangered status decision does not automatically change the time frame for a decision on the salmon farm leases, which could be made at any time.

While West Coast Council mayor Shane Pitt welcomed the funding, he said the announcement was "worth nothing" if Ms Plibersek's decision was still on the table.

"It makes no sense whatsoever to provide funding for three years for science-based projects in Macquarie Harbour while the uncertainty of the EPBC review, which could end the industry tomorrow, remains," Cr Pitt said.

Labor says fish farms and conservation 'go together'

Tasmanian Labor senator Anne Urquhart said the funding would deliver a "strong future for fish farming in Macquarie Harbour".

"Labor stands on the side of jobs, and we also stand on the side of sustainability," Ms Urquhart said.

"These two things aren't contradictory; they go together."

An oxygenation project that aims to increase levels of dissolved oxygen in the harbour and offset impacts from salmon aquaculture is already underway.

Led by the Institute of Marine and Antarctic Studies (IMAS), and joint funded by the federal government and Salmon Tasmania, the preliminary trials were deemed a "success".

Last September, Tasmania's Environment Protection Authority said median dissolved oxygen levels in the harbour were the highest they had been in more than a decade.

Agriculture, Fisheries and Forestry Minister Julie Collins said federal funding would further support the program.

"Tasmania’s independent environmental regulator has already confirmed oxygen levels in Macquarie Harbour are rising," Ms Collins said.

A captive breeding program, also run by IMAS, has already seen some early success, with the first skate to hatch from an egg in captivity recorded in August.