Construction on the $665,000 project located at the northern end of Koroit Caravan Park is expected to finish at the end of August and house up to two people in each.

Moyne Shire Council deputy mayor Daniel Meade said the short-term cabins would be in place by mid-July and would help ease the shortage of housing for key workers in Moyne Shire's fastest-growing area.

"We know there is a major shortage of housing in our region and that in turn leads to labour shortages," he said.

"These cabins are one way council is working towards easing some of that pressure and putting practical solutions in place.

"The state government has also recognised the issues our region is facing. They have listened to what we have been saying in our advocacy and have responded positively through Regional Development Victoria and we thank them for that collaborative relationship."

Cr Meade said the housing shortage was "dire".

"The feedback we're getting from the community is that it's a dire situation," he said.

"There's a severe shortage of workers across many of the sectors including dairy, dairy processing, hospitality, retail and health.

"One of the main reasons we can't attract workers is because of housing availability."

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The pre-fabricated cabins will include a queen-sized bed, living space with a couch, kitchenette with cooking facilities, en-suite, flat-screen TV, air conditioning and the use of shared facilities including laundries and barbecues.

The cabins at the council-owned park will be similar to those installed at the Mortlake Caravan Park late last year.

Cr Meade said those cabins were fully-booked for the next six months.

"Mortlake has shown how successful this model is and has highlighted the flow on impacts for every business in the town," he said.

"It means there are extra people in town going to the supermarket, buying fuel, having a drink or a meal - and it means businesses can attract workers. It's a win-win.

"The additional benefit is when they are not being used for worker accommodation, they will be available to be booked by tourists, adding to accommodation options in both towns."

Local businesses are able to register their interest now here.

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