Rotorua Mayor Steve Chadwick said the council had a comprehensive strategy aimed at progressively extending cycling facilities, adding local cycleways were becoming increasingly well-used by Rotorua locals - particularly for commuting to work and school.
"We would expect to be in a strong position to submit - in collaboration with local cyclists - a compelling case for a share of that funding and we look forward to finding out the terms of reference and criteria for applications once they've been formulated," she said.
"As a city and district that's developed a national and international reputation as New Zealand's biking capital - including some of the world's best mountain bike trails - we're very keen to see our urban cycling network further expanded.
"Funding availability is the key limitation to achieving this at present.
"So we're very encouraged at the possibility of additional funding support from central government, to help take commuter cycling in Rotorua to even higher levels."
Mr McClay said cycling had become incredibly important to Rotorua's economy.
"In the last week alone, we have heard some good announcements about cycling, including the expansion of Skyline's Gravity Park and the world's biggest mountain-biking competition Crankworx coming to the city.
"Placing a stronger focus on local cycleways to encourage more locals to bike to work also promotes a healthier lifestyle while reducing the pressure from other transport methods and roads."