The Victorian Civil and Administrative Tribunal has given a tick to the 20-bed alcohol and drug rehab facility to run from a property on Atkinsons Lane despite opposition from the Dennington community.

In April Warrnambool City councillors voted against a planning permit, however VCAT on Thursday afternoon released its findings, six weeks after six days of hearing evidence in Warrnambool and Melbourne.

A VCAT panel report said it acknowledged there would be different opinions about what represented a net community benefit.

"We consider that on balance, there is such a benefit in approving a residential alcohol and drug rehabilitation centre on the review site," the report said.

"There is no dispute that there is need for such a facility in this part of Victoria. Despite submissions to the contrary, we are not persuaded that the proposal will have unacceptable environmental or amenity impacts.

"Fears about unacceptable off-site impacts and personal risks to neighbours appear to be driven by concerns about inadequate management of the centre, with attendant issues caused by residents 'escaping' through neighbouring properties or 'undesirable' visitors bringing alcohol and drugs into the area and meeting up with residents."

The report said the proposal represented a modestly sized facility, where residents were towards the end of their rehabilitation journey.

"We are persuaded that with an appropriate management regime the facility will operate so that neighbours will not be disadvantaged or suffer personal risk or harm from residents," it said.

"Our consideration of the application has required us to balance the desirability of providing a much needed facility relatively close to the urban services of Warrnambool against the need to ensure that the facility does not cause unacceptable impacts when assessed against the full suite of relevant provisions of the Warrnambool Planning Scheme."

Western Region Alcohol and other Drug centre director Geoff Soma, who has led the push, said the organisation was "delighted" with the decision.

"WRAD can now make the Lookout Residential Rehabilitation centre a reality for clients and their families in the Great South Coast," he said.

"WRAD is dedicated to make this project work efficiently and effectively to provide a quality service for clients experiencing significant alcohol and other drug problems in their local community.

"The planning approval process has been difficult for all involved, but WRAD believes The Lookout remains a much-needed service for our community."

Mr Soma said the Atkinsons Lane site was subjected to forensic examination during the VCAT process.

"We are convinced the site is suitable and are pleased that the independent VCAT system has given it the tick of approval," he said.

"Our community needs a locally based residential rehabilitation facility. We now have a community response to a community problem.The money already donated to the establishment of the Lookout is secure, untouched by the VCAT and planning process."

Mr Soma said WRAD would work with the community to make The Lookout a reality and "to make a difference to the lives of clients and families struggling with addiction".

"We understand that there is rarely change without controversy and we must work through the issues as they arise," he said.

"WRAD intends to form a community consultation committee to be the conduit between the community and the service providers."

Mr Soma said updates on the development of the Lookout project would be posted on the WRAD website - www.thelookoutrehab.com.au

"WRAD would like to thank the local community and philanthropic trusts and the many organisations that have supported the Lookout project to date," he said.

The original planning permit application to the council drew 34 objections, with four submissions in support.

Objectors had concerns about safety and security for community groups and Dennington residents.

Dennington resident Richard Ziegeler said he was "incredibly disappointed" with the VCAT decision.

"We just have to make the best of a very bad situation," he said.

"We are in a place that means that The Lookout has a less than ideal site for itself. The local residents say that it can't work at that site."

He said local residents would be worried about the facility.

"There's an awful lot of people who have said to us that it is an absolutely stupid choice made by people who don't know the area," he said.

"I'm sure there are people who will consider selling."