A group of rural Queensland councils are celebrating a Federal Government backflip, which they hope will bring relief and protect jobs.

The Federal Government says it will reimburse councils for the cost of redirecting staff to oversee rebuilding work under Natural Disaster Relief and Recovery Arrangements.

Councils say local authorities will be better than external contractors.

“We have always argued that we can do it much, much cheaper, and much more efficiently than outside contractors coming in to do that work,” Rob Chandler, from the Remote Area Planning and Development Board, told reporters.

“The straw that broke the camel's back... [was] the work that Main Roads did to prove the local workforces in Queensland over the last 12 months could have done it $160 million cheaper by using council labour,” he said.

Councillor Chandler said keeping works in-house would mean millions of dollars for remote council budgets, job security for workers and spare funds for extra services.

“Just in our budget of course, we have to get that bottom line to work so everything comes out,” he said.

“Our number one priority is to keep people employed. That is the first thing.

“Where we have $3 million come back like this from a very, very good decision by the Federal Government, it gives us then the opportunity to put some of those social programs back into the budget.”