Midfield Meat has employed 170 new staff members in the past month, according to spokesman Dean McKenna, who says he has vacancies for 500 more.

The intake increases Midfield's workforce to about 1300.

But Mr McKenna said the company was desperate to find housing in the region for workers all across Australia who wanted to work in the city but couldn't find anywhere to live.

"We've got people waiting to start but we can't find housing for them," Mr McKenna said.

"We could easily take another 500 employees."

He said the business was operating at about 44 per cent of its capacity due to issues finding housing for prospective staff.

"Housing for staff is the biggest issue for us followed by freight," he said.

Mr McKenna said the company's productivity had increased with the new staff, as it was only operating at 30 per cent a month ago.

He said it was the first time in the company's history it was operating at below 50 per cent.

"We've been at half pace in past years - but never this low," Mr McKenna said.

He said that was partly due to the business expanding, but the housing issue was negatively affecting the company's potential.

"The rental availability that we had is just not there," Mr McKenna said.

The company unveiled plans for a housing village for workers in March this year.

The proposed development would provide accommodation for about 100 workers.

The first stage of the Merrivale project includes modern cabin-style accommodation as well as facilities such as kitchens, laundrettes, basketball courts and a gym.

Midfield project manager Malerie Janes said the project, which would cost millions, would be "like a Big4 caravan park for workers but there would be no caravans".

Mr McKenna said the company was also looking at other housing options.

"We've got two people working full time on accommodation needs," he said.

"We've got Eccles Street and two others we are actively working on."

Warrnambool councillor Ben Blain recently spoke about the issue of a lack of housing for workers.

Cr Blain said he believed a lack of rentals was "holding Warrnambool back".

"It's holding back our economy because we can't find workers because they can't get housing," Cr Blain said.

He said the council was aware a lack of housing was an issue across the state but he believed it needed to do more to address the issue.

"At this point in time housing is one of the city's biggest issues," he said.

"Something we should be looking at is council investing in housing to rent out."

Cr Blain said the houses could be rented out at "market rate" to allow the city to grow.

"Without enough housing, business and economic growth stalls."

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