Eight objections were lodged to the proposal for an off-site supply and logistics centre for the hospital over the car parking issue.

City councillors voted to issue a notice of decision to grant a permit at its Monday meeting.

The two-storey facility will include a modern healthcare supplies warehouse and commercial laundry and linen service - freeing up space at Warrnambool Base Hospital for construction of the planned multi-level hospital tower.

The 6475-square-metre parcel of land - on the corner of Cooper and and Robson streets in the industrial estate - was purchased in January 2020.

Work is slated to begin on the project by the end of the year and is part of the long-awaited $384 million redevelopment of South West Healthcare's Warrnambool hospital.

The project requires 89 car parking spaces, but the plans fall 60 spaces short.

"The parking shortfall is considerable and should not be discounted," the council agenda says.

"...however, on balance the proposal is considered to meet the requirements of the planning scheme and should be supported."

A report to councillors said all objectors cited the parking reduction as an "unsuitable outcome". The proposal provides 29 car parking spaces, and the applicant has been working with the council to formalise on-street parking options.

Cr Max Taylor said it was a vital and necessary asset for South West Healthcare.

He said while he was concerned by the eight objections about parking, "on balance" the proposal was considered to have met the requirements of the planning scheme.

But he said the use and development of the land was subject to 21 conditions, and pointed out there was two years to begin construction.

Cr Richard Ziegeler described it as an excellent manifestation of the historic and brilliant work of the hospital and its management.

He said neighbours' fears of regular disruption may in fact be realised, but it was a project that needed to be supported.

Deputy mayor Debbie Arnott said it was a significant application, and while she had initial concerns about the amount of parking and truck turning space in and out of the site, she had faith that had been addressed.

Cr Ben Blain said parking was the key issue for surrounding businesses in particular.

"On balance, South West Healthcare have actually done what they have in order to try and alleviate the parking pressures for this area of the industrial estate," he said.

Cr Otha Akoch said it was an important project for the region.

Mayor Vicki Jellie said it was a"tricky" project, but it would be exciting.

"It is what's needed... it will serve not just Warrnambool but the region," she said.