Work is set to begin on an Islamic mosque that has divided a city in central Victoria and sparked violent clashes on the streets.

After two years of legal battles, construction is beginning in coming weeks on Bendigo's first Muslim place of worship.

Mayor Margaret O'Rourke said the development complied with planning laws and confirmed her council had 'no other direct or financial interest in the mosque'.

More than 700 people protested for and against the Bendigo mosque plan in October 2015

An artist's impression of the Bendigo mosque that will feature two prayer rooms and a shop

Nationalist and left-wing protesters engaged in violent mosque confrontations in late 2015

Nationalist protesters held up placards to oppose plans for Bendigo's first Muslim mosque

Plans for the mosque were granted a permit in 2014 but residents took that decision to the Victorian Civil and Administrative Tribunal and the Victorian Court of Appeal, which both dismissed the objections.

An appeal to the High Court also failed with the applicant, Julie Hoskin, ordered to pay costs in June 2016.

The City of Greater Bendigo received more than 350 objections to the development before the $3 million mosque was approved in June 2014.

The design included two prayer rooms, a shop and a community sports hall.

A woman in Bendigo in 2015 associated the mosque proposal with Islamic child brides

Four people arrested in October 2015 as riots for and against the mosque flared in Bendigo

Left-wing protesters held up placards in October 2015 in favour of Bendigo having a mosque

The United Patriots Front turned out in force in October 2015 to protest against the mosque

Police grab a United Patriots Front supporter opposed to the mosque proposal in October 2015

In October 2015, 700 protesters from the nationalist United Patriots Front and the left-wing Rally for Diversity clashed at Rosaline Park, in central Bendigo.

It needed 420 uniformed police to control it, and led to four arrests including two people caught carrying knives in public places, one for carrying a flare and one for an assault.

That protest came just two months after hundreds of people gathered for counter-rallies in Bendigo.