“It’s a good move, but I wonder how it will pan out on rates bills,” Mr Ludeman of Warrnambool told The Standard yesterday.

According to Treasurer Michael O’Brien, flats and units which had been classified as commercial investments for the new levy, which kicked in last July, will now be again classified as residential, thus incurring a lower fee.

Mr O’Brien said the changes would provide an average annual saving of almost $260 for owners and tenants of more than 60,000 rental properties from July 1.

The system triggered widespread complaints because investment flats and short-term accommodation units were charged a commercial levy rather than the previous residential classification.

It prompted rental increases as landlords passed on some of the hefty levy hike.

Mr Ludeman said he knew of several examples where multiple dwellings on a single title were levied with individual fire services levy bills rather than a single property notice.

He was uncertain how the changes would be determined for differing property types.

“It’s technical,” he said.

“Councils will have to readjust rates notices for the levy collection.”

Liberal MP for Western Victoria Simon Ramsay said he had many constituents complain about the previous system and had passed on the concerns to Mr O’Brien.

“I’m pleased to see the message was heard and changes have been made to improve fairness and equity of the fire services levy,” he said.

Some  councils will also benefit from reductions  in charges for outdoor sportsgrounds that have a commercial application.

The transition from an insurance levy to a property-based levy recommended by the Victorian Bushfires Royal Commission raised $610.9 million which was allocated to fire services.