The Otago Central Rail Trail, which marked its 20th anniversary earlier this year, has been credited as the catalyst for the national cycle trail network.
Its trust will be applying for a share in the first round of government funding through the new contestable fund.
The Government announced the initiative in February with the aim of refining, improving and maintaining completed sections of the trails which made up the Great Rides in the national cycle trail network.
The $8 million will be distributed over four years. Applications opened on Friday.
A total of $2 million is available this year.
Trails which are part of the national cycle network are eligible and can apply for a maximum of $300,000. They have to raise an equal amount to the funding sought.
Otago Central Rail trail trust chairwoman Kate Wilson, of Middlemarch, confirmed yesterday the trust planned to apply to the fund to help finance an underpass, under State Highway 8, which would link the town with the Clyde end of the 150km trail.
The $300,000 project was discussed during the Central Otago District Council's annual plan hearings and the council decided the underpass should take priority in its works programme, for safety reasons.
The trail trust was one of 23 submitters to the annual plan about the underpass, all in support.
The council resolved to seek a subsidy from the New Zealand Transport Agency and also explore options for raising the rest of the money needed.
Earlier this year, the trail trust said it was backing the underpass and wanted to continue the trail into the Clyde township, as far as the Clyde Railway Station, across the road from what was now seen as the start or end of the trail.
''An underpass would benefit huge numbers of locals as well as cyclists and pedestrians on the rail trail and is needed for safety reasons.
It makes good economic sense to continue the trail into the town to the railway station building,'' Mrs Wilson said yesterday.
The council had indicated it would provide some funding so she believed it would not be difficult to raise half the funds, as required under the government trail maintenance fund criteria.
''The response we've from residents and other potential funders, since we started rallying support for the underpass has been huge,'' she said.
The 34km Roxburgh Gorge trail, from Alexandra to Lake Roxburgh, was also considering applying for ''a small amount of funding'', trail trust chairman Stephen Jeffery, of Coal Creek, said.
''There's some tweaking we'd do to some parts of the trail, now that it's been open for almost a year, and maybe we'd add in some culverts as well - just a few wee modifications to it really; nothing major.''
