Speaking to reporters after the project's unveiling Sunday, Australian Environment Minister Josh Frydenberg said the reef was under a lot of pressure but those challenges could be overcome.
It builds on the joint $2 billion Australian and Queensland Reef 2050 plan.
A major outbreak of coral-eating crown-of-thorns starfish has been destroying areas of the world heritage listed reef, prompting a major cull in January.
But the cash splash has been met with criticism from conservationists who have accused the government of not doing enough to address the thing that poses the biggest threat to the reef, climate change.
"Today's investment brings real hope to the Great Barrier Reef", Dr Schubert said.
Jon Brodie, a professor at James Cook University's Coral Reef Studies Centre of Excellence said the funding was an extension of existing failed programs.
"It's not working, it's not achieving major water quality improvements", he said.
Bill McKibben, founder of global grassroots climate movement 350.org, said: "Science is well aware of what is killing the coral - it's the excess heat from burning fossil fuels". "To simultaneously promote the world's biggest coal mine while pretending to care about the world's largest reef is an acrobatic feat only the most cynical politicians would attempt", he said.
Australian Conservation Foundation chief Kelly O'Shanassy agreed.
Critics seized on Australia's continued subsidized development of gas and coal, especially its openness to the Adani coal mine in northern Australia that would be among the world's largest, pushing coal on boats running near the reef.
The $201 million of the funding package will be allocated for improving water quality, which involves changing farming practices such as reducing fertilizer use. The proposal also includes A$58 million ($43.8 million) to stem the spread of crown-of-thorn starfish, a poisonous coral-eating predator.
He said the government would work with traditional Aboriginal owners, the tourist industry, farmers and scientists, to save the reef, calling the commitment "a game-changer". "And we must unlock new scientific insights that can help restore the reefs that have suffered damage".
But scientists and environmental advocates warn that the 1,400-mile-long Great Barrier Reef is already facing a full ecosystem collapse with global warming increasing water temperatures and acidity, leading to extensive coral bleaching.