The Victorian Government will invest $1 billion in a fund to increase the state's social housing stock after the accommodation waiting list blew out to more than 33,000 people.

Key points: More than 33,000 people are on a public housing waiting list

More than 33,000 people are on a public housing waiting list Fund will be similar to the Commonwealth's Future Fund

Fund will be similar to the Commonwealth's Future Fund Program will offer low interest loans and loan guarantees to community housing providers

Treasurer Tim Pallas said the social housing growth fund would be set up over the next four years and operate similarly to the Commonwealth's Future Fund.

Any revenue earned would be used as a funding stream to encourage the private and philanthropic sector to build new social housing and offer subsidised rent to those in need.

"It may mean … more concentrated housing in existing areas where development is occurring, with a bonus from the state for those developers who provide social housing as part of their overall housing option," Mr Pallas said.

Other measures include a separate fund offering low interest loans and loan guarantees to community housing providers, who sometimes struggle to secure finance from traditional lenders.

The management of 4,000 public housing properties will also be transferred to the community housing sector.

"This is the biggest single injection in social housing in the state's history. A level of effort unprecedented in this state," Mr Pallas said.

Social housing fund 'will save lives'

The Victorian Council of Social Service's chief executive Emma King described the package as a "smart and significant investment".

"The fund will provide for a pipeline of new social housing long into the future, helping more people find secure, affordable and appropriate housing," she said.

"It is a game changer. It will change the lives of everyday Victorians and in some cases, let's be frank, it's going to save lives."

But the Community and Public Sector Union (CPSU) has warned vulnerable Victorians could suffer if the management of more public housing stock was outsourced.

It said transferring management of 4,000 public housing properties to the community housing sector would slash up to 40 jobs from the Housing Department.

"The announcement shows the Government has learnt nothing from the privatisation of other social services like residential care which occurred under the former Government," CPSU state secretary Karen Batt said.

She said the community housing sector has "a proliferation of insecure workers, either casual or volunteer".

State Government calls for more help from Commonwealth

Housing Minister Martin Foley said in addition to the 33,000 people on the public housing waiting list, there were many more thousands waiting for social housing.

"We will expect to see, when the Census details from last year come out, homelessness and waiting lists for public housing and social housing to continue to grow.

"This is not just a Victorian problem, this is a national problem, and it's about time Malcolm Turnbull and the Federal Government realised that," he said.

Opposition spokesman Tim Bull said the waiting list could be further reduced if the minister introduced further checks and balances to the system.

"We need to be monitoring the circumstances to make sure that our public housing stock is being occupied by the most needy families," he said.