State Planning Minister Sonya Kilkenny this week announced approval for Warrnambool's Midfield Meat to create a village to house workers in cabin-style accommodation on a tract of land in Merrivale.

Midfield has plans for up to 221 key worker accommodation units on the Eccles Street site. 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 company first revealed the concept two years ago because of a lack of housing in the city, not only for its workers but other key employers. Just why it's taken so long to get to this point needs to be questioned, especially when the government wanted to fast-track developments post-COVID.

As we have reported extensively, finding a rental has been tough for the past three or so years with Warrnambool having one of the lowest rental vacancy rates in the state. Prices have soared as property values jumped and combined with rising demand, many people have been priced out of rental accommodation, including young people looking to take their first steps of independence and move out of their family homes.

Midfield's Dean McKenna 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.

Midfield has been operating at 50 per cent capacity for beef production and 80 per cent for sheep and lambs.

Mr McKenna rightly said the project would be good for the city.

The concept is different but crucially it can quickly make a dent in the city's housing crisis.

The project attracted a "small number" of submissions, according to the minister, and an independent panel had thoroughly examined those. Ms Kilkenny said the project had been approved with conditions addressing concerns from neighbours.

With any development, finding a balance between objectors and progress is important. Traffic management is one of the issues that have been addressed in the conditions.

Midfield says it will examine the conditions and then get started as soon as it can. The first stage of the development cost about $8.5 million and create 70 short-term jobs and 230 ongoing jobs, the government said.

This is good news for Warrnambool and the region.