Rent levels in Melbourne are seeing low-income families priced out of even the city's once affordable suburbs such as Dandenong and Frankston, a Senate inquiry into housing prices will hear on Tuesday.

And with rent on a one-bedroom flat now topping $300 a week in suburbs including Balwyn and Brunswick, more must be done to create affordable options, housing groups say.

The Tenants Union is among a dozen housing, academic and community groups presenting on Tuesday at the Melbourne hearings of the Senate's inquiry into affordable housing.

Its policy officer James Bennett said rent levels in Melbourne were so high most people on welfare benefits would be lucky to find anywhere they could afford.

Department of Human Services data for "affordable lettings" in March 2014, the most recently available figures, shows 0.4 per cent of one-bedroom rentals and only 12 per cent of three-bedroom rentals were affordable in metropolitan Melbourne.