The $14 million, 68-unit development on Mortlake Road next to the fire station was given the green light as part of the government's plan to stimulate the economy in the wake of the COVID-19 pandemic.

The project will also include shops, a medical facility and community hub.

Planning Minister Richard Wynne approved an amendment to Warrnambool's planning scheme to ensure the project wasn't held up through the council approval process.

Mr Wynne said, in supporting documents explaining his decision, that the benefits of the exemptions outweighed any effects on third parties.

He said that without the exemption, the development would otherwise be delayed by the council decision and any subsequent Victorian Civil and Administrative Tribunal review process.

"The use of the exemption will bring forward economic stimulus, investment and job opportunities in circumstances where they are urgently required."

Paul Gardner, who objected to the original proposal, said the first he'd heard of the fast-track process was when he was informed that the project had been approved by the minister.

He said a lot of the issues raised in the objections had now been scrapped.

"Any of our objections haven't been heard," Mr Gardner said.

Under the fast-tracked process the objectors have lost their right to appeal any decision through the Victorian Civil Administrative Tribunal or a planning panel hearing.

"Even if you went to VCAT and lost you'd accept it on the chin, but you don't even have that option," Mr Gardner said.

"We know that something is going to go there, but to have 68 apartments on that little roadway.

"We understand there is a need for housing in Warrnambool, but there's probably better ways to create housing.

"I don't want to come across as being dead against it. We understand that something is going to happen, just a bit more thought and maybe not on such a grand scale."

Objector Jono Ryan said he had concerns about the amount of units and traffic issues it would cause.

"It's just disappointing that it's gone straight to Melbourne and councillors haven't had their say in it. Because they knocked Dales Road back, we all assumed they would have knocked this one back as well," Mr Ryan said.

"It seems like it's out of our hands.

"Warrnambool's flat out anyway. If you can get a tradesman before Christmas you're doing well. It's not like it's slowing down at all."

Jenny Bullivant said while the project was obviously fast-tracked to create employment because of the pandemic she was concerned that in years to come it may be a regrettable decision to approve the development.

"We accept that there's going to be a development here but we don't want two and three-storey buildings, and 68 apartments is just ridiculous for this space," she said.

Sue Fowler said there would be seven two-storey townhouse overlooking her fence line, and the garages and gardens would be only three or four meters from her kitchen window.

She said it was always assumed the land would be developed, but she thought it would be one-storey units like hers.

Mr Wynne said the amendment supported capital expenditure of about $24.2 million and provided a product not readily found in Warrnambool which would help address the city's housing affordability.

"Given the dire economic circumstances created by the COVID-19 pandemic, stimulus of the Victorian economy is urgently required," he said.

"Delays in facilitating the amendment would stand in the way of realising its economic and social benefits, which include investment and job creation."

Mr Wynne said under modelling undertaken by the Department of Treasury and Finance, Victoria's unemployment rate could rise to 11 per cent and job losses could peak at around 270,000 in the September quarter.

"The road to recovery will be longer than first expected, with the magnitude of the downturn meaning that Victoria would likely record negative economic growth in both 2019-20 and 2020-21," he said.

Our COVID-19 news articles relating to public health and safety are free for anyone to access. However, we depend on subscription revenue to support our journalism. If you are able, please subscribe here. If you are already a subscriber, thank you for your support.