The Mornington Peninsula and Yarra Ranges shires are asking the state government to recognise them as 'peri-regional' councils, to unlock more funding for both areas.
Both areas are currently protected by the Planning and Environment (Metropolitan Green Wedge Protection) Act 2003, which identifies them as part of the 'metropolitan fringe'.
The councils want to be removed from a metropolitan Melbourne designation, without the need for legislative change.
Mornington Shire mayor Anthony Marsh said it was planned to replicate the peri-urban model, which covered six local authorities on the fringe of Melbourne.
"There was a bunch of local authorities who said they were not purely regional but had urban aspects - it's a bit more nuanced than whether you are regional or urban," Cr Marsh said.
"They managed to convince the government they were peri-urban, which means they unlocked access to the Growing Suburbs fund, which was predominantly an urban funding stream."
He said there was no need to change the planning act, but both the Peninsula and Yarra Ranges were not purely urban.
"If you drive anywhere on the Westernport of Bass Strait side of the Peninsula you see its very rural and regional in nature."
The federal government had given some regional funding to the Peninsula.
"We need to advocate more that we are disadvantaged and not getting our fair share."
He said more state government funding would free up money, raised by council, for other areas of development.
"Ultimately, we are just trying to attract as much funding as we can into the Peninsula - how we distribute that is less relevant.
"We are trying to get as much funding from the various tiers of government."
He said the Peninsula got only a 'very small percentage" of the funding granted to Geelong.
"We are just saying give us our fair share."
He said it didn't matter where the money was going to be spent.
"If someone gives you $10,000 to maintain your car, that is now $10,000 you can spend on a holiday, because you don't have to use it on your car," he said.
"It's of absolute benefit for the whole of the Peninsula because the overall pool of funds to spend on the community is greater.
The council was highly dependent on rates.
"We don't have high user fees, we don't have high grant receipts, so we do rely heavily on rates - this would take some of the pressure off rates."
Yarra Ranges mayor Councillor Jim Child said the council would be working with Mornington Peninsula, advocating to the state government to better recognise the region's mixed metropolitan and regional makeup.
"Both Mornington Peninsula and Yarra Ranges have some urban townships and areas, with urban issues such as high housing prices, but we also have communities that share regional issues, such as slow internet speeds, poor public transport and socio-economic disadvantage compared to our neighbours," Cr Childs said.
"We also share economic strengths with our regional areas, including agriculture, tourism and cultural industries that make significant contributions to the state economy."
Importantly, a significant amount of funding opportunities and programs provided eligibility based on classification of metropolitan or regional status.
"For years, both councils have had access to urban funding programs only, to deliver regional objectives and projects," he said.
"While we are occasionally granted access to funding for these activities, it is often ad hoc.
"Moreover, the evidence shows the level of support provided does not match the economic contribution our two local government areas make to the state."
Cr Childs said while initiatives existed to assist Interface councils, those around Melbourne's metropolitan edge, many other programs that would benefit the shires' regional communities were out of reach while they remained classified strictly as metropolitan councils.
"This also impacts community groups and organisations who may deliver services to our more regional areas, but would be unable to access regional funding programs due to our classification," he said.
"One potential solution to this is for state government to recognise peri-regional councils - in the same way they have recognised peri-urban councils - allowing Mornington Peninsula and Yarra Ranges to access funding and programs for both metropolitan and regional councils, and better represent the different regions in our municipalities."
A state government spokesperson said the government regularly engaged with councils.
"Any proposals by Mornington Peninsula Shire Council and Yarra Ranges Council will be considered on their merits."