The nine and 10-month-old lambs were killed or had to be destroyed after the incident which occurred near the Floating Islands nature reserve about 2am.

Colac Police said the triple-decker truck was travelling east on the Princes Highway with 716 sheep aboard on route from Mount Gambier to the Colac abattoir when the 29-year-old driver lost control and left the road.

Senior Constable Ray Doensen said the carrier ran onto the opposite side of the road where it collided with a heavy guard rail pole and then slid for 100 to 150 metres, destroying a large section of safety rail.

The driver, a Mount Gambier man, was taken to Camperdown hospital with minor injuries including grazes down one side of his body.

Police, ambulance officers, the State Emergency Service, Country Fire Authority, Vicroads and Department of Primary Industries (DPI) animal health officers were involved in the clean-up task.

A DPI spokesman confirmed yesterday afternoon that 461 lambs had died or had been put down after the crash, with 255 surviving.

The truck's two upper floors collapsed on impact, pinning many of the sheep, while others on the top deck were able to escape.

There were cheers all round when workers managed to rescue the three dogs from the steel dog boxes below the tray. They had become trapped when the truck slid and ended up on its side.

State Emergency Service workers used the jaws of life to cut holes in the boxes and carefully free the animals. They quickly recovered from their ordeal and were able to help round up the live sheep.

One witness at the scene said it appeared the carrier's back trailer may have "bucked" and then flipped, causing the entire vehicle to slide onto the driver's side.

"It looks like a bomb's gone off. There were dead sheep everywhere," the witness said.

Police initially blocked one lane of the highway to traffic between Hawkes Nest Road and the Pirron Yallock Hotel as the surviving sheep were rounded up and the injured animals were destroyed.

All traffic was later diverted from the highway for several hours at Tomahawk Creek Road and Camperdown while the truck was righted.

A front-end loader was used to load the carcasses onto a truck for burial away from the scene.