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Sue Cashmore from the Cockermouth Flood Action group said:
"We would not have got the flood defences without this money.
"It may seem like a small amount in relation to the total but it was vital.
"We will all benefit from these defences and we are hoping it will mean insurance premiums will come down. At the moment at lot of people are being priced out of the market."
Most of the money was raised by a council precept paid by those living around the town and a large portion came from local businesses.
Community members and businesses in Cockermouth have raised the funds needed to secure the £4.4million flood defence scheme which will protect the town from future flooding.
Residents and businesses owners had to agree to raise £215,000 of the total sum the government released its funding, and that money has now been collected.
Work began on the flood defences last year and will be complete by June.
They include flood walls, barriers and a state of the art system at Ruby Banks where the barrier rises as the river swells - the first of its kind in the country.