A village to house Midfield Meat workers in cabin-style accommodation in Merrivale has been given the green light by the state government.
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The plans include on-site recreational facilities such as basketball courts and a gym as well as upgraded pedestrian and cycling connections to the surrounding area.
The project - which had been likened to a Big 4 caravan park - would be developed in stages.
Stage one would cost about $8.5 million and create 70 short-term jobs and 230 ongoing jobs, the government said.
"The approval delivers on commitments within the Victorian Housing Statement, by delivering more housing in regional Victoria and streamlining the planning approval process," the state government said.
"The Midfield Key Worker Housing Village in Warrnambool provides a range of single and shared occupancy rooms, rooms with en suites and shared kitchen, bathroom and recreational facilities.
"The facilities and amenities are similar to a holiday camp arrangement."
The government said a "small number" of public submissions were received, with objections referred by the minister to the Priority Projects Standing Advisory Committee.
The committee conducted a hearing "on the papers" in August 2023 and provided a report to the minister recommending approval, subject to conditions.
"Matters raised by objectors have been comprehensively considered by the advisory committee, with the proposal considered acceptable on balance," the government said.
"A range of conditions were recommended by the committee to address the concerns of objectors, including traffic and car park requirements, and internal and external amenity conditions."
The approval - which includes an amendment to Warrnambool's planning scheme - will pave the way for the works to begin.
Midfield Meat's Dean McKenna said when the company received further details around what conditions had been placed on the development, it would be assessed.
They would then actively look at making a start on the project.
He said the approval of the project would make a "huge difference".
"It will reduce our footprint in the community," he said.
"This will free up the housing situation in Warrnambool."
It would also allow Midfield Meat to increase production.
At the moment, the site has been operating at 50 per cent for beef production and 80 per cent for sheep and lambs.
"We've got many, many people applying for jobs here," he said.
Mr McKenna said the project would be good for the city.
"Yes it's taken near on three years. It would have been nice to have it two or three years ago but now we're actually better informed about what we believe will or won't work," he said.
"So now it will actually be done better than it was going to be done."
Warrnambool City Council's chief executive officer Andrew Mason said the council was happy a decision had been made.
Mr Mason said the council recognised the importance of housing for Midfield workers.
He said it would also relieve and address the broader housing pressures in the city.