The new program will target timber on Kangaroo Island and support the transportation of bushfire-salvaged softwood to mills.

Australian Forest Products Association CEO Ross Hampton said without the investment up to 10,000 house frames of timber would have been bulldozed and burnt.

"At a time when our builders and home owners are desperate for timber this would have been an extremely poor outcome," Mr Hampton said.

Housing Industry Association managing director Graham Wolfe said the residential building industry had been navigating its way through a period of record building activity.

But at the same time, the impact of COVID has put constraints on building materials and delayed the commencement of new projects.

"Timber supply in particular has been affected by a range of factors, including last year's bushfires and skyrocketing global demand," Mr Wolfe said.

Master Builders Australia chief executive Denita Wawn said it was a great move.

"The acute timber shortage is causing delays and cost increases that are hurting our members and negatively impacting their clients," she said.

"Builders and tradies around the country will be breathing a sigh of relief."

Housing Minister Michael Sukkar said the government was backing in the building and forestry industries to keep the economy growing and employing Australians.

"By ensuring our supply chains can support the pipeline of new builds, we are helping people get into their new homes as soon as possible," he said.

Australian Associated Press