A "for sale" sign showing a woman sunbaking topless has sparked calls for an overhaul of Victoria's privacy laws.

The image, captured by a real estate agency using a remote controlled drone, appeared on a for sale sign of a Mount Martha home on Victoria's Mornington Peninsula.

It showed an aerial shot of the property, but it also captured next-door neighbour, Mandy Lingard, sunbaking topless in the privacy of her own home.

The sign was pulled down on Monday.

Victoria's Privacy Commissioner David Watts said he was not surprised when he heard about the incident.

"I've been waiting for this sort of story to happen," he said.

The Victorian Surveillance Devices Act dates back to 1999, meaning drones are not governed by any clear privacy protections.

Commissioner Watts said it was clear the laws need to be overhauled.

"I think we need to see some regulation brought into place that requires the use of drones to be done reasonably and complies with peoples' expectations of privacy in their own private spaces," he said.

Commercial drone users must be licensed and cannot fly in built up areas, such as Mount Martha, without special permission.

The Civil Aviation Safety Authority, which governs the use of drones, said its primary concern was public safety, not privacy.

The Human Rights Law Centre's executive director, Hugh de Kretser, said the law surrounding drone use needed to be modernised.

"It's a pretty astounding breach of privacy to use that image, first of all to take it, but then to use that image so publicly," he said.

"The law's really playing catch up in this area, we have a range of laws providing really piecemeal protection."

The Real Estate Institute of Victoria's chief executive, Enzo Raimondo, said the industry's use of drones was being investigated.

"Given this incident we'll get our estate agents practices committee to take a look and come up with some general guidelines," he said.