The project was officially opened last night by Warrnambool's Mayor Cr Michael Neoh, who said the property's historical nature had been maintained.

"The harbour master's house is in a beautiful setting near the lighthouse, with magnificent views of the ocean and Flagstaff Hill from the rear," he said.

Built in 1911, the weatherboard house has had numerous tenants, including university students in recent years.

Tourism services manager Peter Abbott said it took about 18 months to convert the old layout into three bedrooms with ensuites, a modern kitchen, lounge and outdoor entertaining area.

"This is a very exciting time for Flagstaff Hill," he said.

"Never before have we been able to offer accommodation to visitors."

The accommodation venture is expected too supplement the Flagstaff Hill income and could be followed by more on-site accommodation.