Warrnambool is set to get 31 new social housing properties under the state government's Big Housing Build, with construction set to begin this year.
In addition to that Portland will receive 53 and Camperdown will receive 13.
Member for Western Victoria Gayle Tierney said the homes would be made available to people most in need of housing including people living with mental illness or disability, people escaping family violence, Victoria's First Peoples and individuals experiencing homelessness.
"These Big Housing Build projects will stimulate our local economy while providing the stability and security of a home for those in our community that need it most," Ms Tierney said.
"These projects will create jobs right here in Western Victoria - with construction expected to be under way this year."
The news comes as Warrnambool's Salvation Army reveals it has been able to place a large number of people seeking housing in motels during the latest lockdown.
However, Major Brett Allchin is concerned about the limited options for people with nowhere to go when the number of people travelling to the south-west increases.
"It's been fairly difficult, with a lot of people finding it difficult to find a place to live," Mr Allchin said.
"The changes to the tenancy act appear to have resulted in less private rental spaces available."
He said there was huge demand for public housing in the city due to the rising cost of rentals.
Mr Allchin said he was concerned there would be very few options for people seeking an affordable place to live once the motels were no longer able to accommodate them.
"During this period we have been able to contact motels and hotels for people needing somewhere to stay and we've really appreciated their support," he said.
"However, we would anticipate with the opening up - especially of Melbourne - this may no longer be an option."
The state government is offering people sleeping rough or experiencing difficulty paying their rent a one-off grant of $1500.
The COVID-19 Rent Relief Grant program will help renters who are experiencing rental hardship due to the coronavirus pandemic.
The one-off payment is available to people who are paying more than 30 per cent of their income on rent.
A Warrnambool woman who has been homeless for four months said she hoped she would qualify for the grant.
"Right now $1500 would help more than enough just to even secure temporary accommodation," she said.
Alanna O'Connor is living with family while she desperately searches for a place to live.
"Right now $1500 would help more than enough just to even secure temporary accommodation," Ms O'Connor said.
She said she had been on the waiting list for public housing for six years and has been on the priority waiting list for six months.
"I have applied for more than 200 houses since May and not having any luck," she said.
Minister for Housing Richard Wynne said he knew there was a large number of people experiencing tough times.
"This will help to alleviate those very real concerns of residential tenants who are financially struggling due to the economic impacts of the pandemic - and more Victorians safely housed means less Victorians experiencing homelessness when they need a home the most," Mr Wynne said.
Anglicare Warrnambool community development co-ordinator Louise Serra said homelessness was a big issue in the south-west.
"There are many people who are living with family for an extended period of time," she said.
Ms Serra said she would like to remind people in need of support the drop-in centre was open from 10am to noon Monday to Friday.
The centre offers toasted sandwiches and coffee and a place to shower for people who need it.
Food packs and assistance to buy other essential items is also available.
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