Melbourne-based legal company Maurice Blackburn has been instructed to start the proceedings on behalf of a group of abalone licence holders and divers.

The virus, known as abalone viral ganglioneuritis, has decimated valuable abalone stocks along a 200-kilometre long section of coast from Cape Bridgewater to Aire River. It was first discovered in December 2005 and has cost the industry millions of dollars.

The herpes-like virus, which in some cases resulted in the deaths of up to 90 per cent of stocks, was first reported when two abalone aquaculture farms in Portland and Port Fairy experienced unusually high levels of abalone deaths.

The class action will allege that the two farms took inadequate precautions to stop the spread and escape of the disease.

Lawyers will also claim the State Government was negligent in failing to require appropriate biosecurity measures at the farms when it initially licensed their operations and that it was negligent in failing to require the two infected farms to halt operations or stop discharging virus-laden effluent into the ocean.

"Although the Government declared the virus an exotic disease under the Livestock Diseases Control Act 1994 on February 7, 2006, the farms were allowed to continue to discharge effluent," Maurice Blackburn said.

Abalone licence-holders and divers are claiming various losses including:

Decreased abalone sales.

A reduction in profits.

A drop in the value of their abalone licences.

Reduction of their allowable annual harvest quotas for abalone.

The class action is being funded by the international litigation funding company Omni Bridgeway.

The Victorian Abalone Divers' Association has previously claimed the immediate de-stocking of the two infected farms would "most likely" have changed the course of the disease's spread.

"There was active surveillance outside the farms from the time of the outbreak," the association said.

"It took over five months of discharging untreated effluent into the marine environment before the virus took hold in wild stocks outside one of the aquaculture farms."