UNSCRUPULOUS rooming house operators will be hounded out of the industry and families in crisis offered emergency accommodation under a State Government plan to reduce homelessness in Victoria.

Legislation to be introduced next year will require all privately run boarding houses to meet new standards of safety and security, including locks on toilet doors, a fire evacuation plan, power overload protection and window coverings in all bedrooms.

All rooming houses will have to be registered, and rogue operators who continue to prey on the poor and offer squalid accommodation will face fines and loss of licence.

The Government has allocated about $7 million over four years to spend on hiring hotel and motel rooms for people thrown out of rooming houses by operators forced to close.

Nearly $14 million will be spent on buying and leasing new not-for-profit rooming houses, especially in inner Melbourne and the western and northern suburbs.

About $3.5 million has been allocated to help rooming house residents find stable, long-term private rental accommodation.

As well, 200 homes for families in crisis will be built over the next two years in Victoria, funded by $50 million from the Federal Government's economic stimulus package.

Premier John Brumby yesterday conceded action was needed because of "growing evidence of illegal and unscrupulous behaviour by some landlords".

He hoped the $77 million rooming house package would ensure vulnerable Victorians were not subjected to squalid conditions or stand-over tactics when needing emergency accommodation.

Opposition housing spokeswoman Wendy Lovell said the Government had known about rogue operators for years but had failed to act, even after the deaths of two people in a rooming house fire in Brunswick in 2006.

Welfare agencies, which have been campaigning on the issue for years, welcomed the package, with Mark O'Brien of the Tenants Union of Victoria saying the new laws would send a powerful message to the "hard-core of rogue operators who are simply in there to make a quick buck".

The Homeless Persons Legal Clinic described the package as "a win for vulnerable residents".

"The rise and rise of dodgy rooming houses in Victoria is hopefully coming to an end," manager James Farrell said.

Victoria has about 500 registered rooming houses, accommodating an estimated 4500 people. The Government estimates there could be another 500 unregistered houses. Twelve new inspectors employed by the Government in July have inspected 138 suspect houses, of which 25 were unregistered.