The health impacts of Victoria's Hazelwood mine fire will be examined in a 20-year study after residents in the town of Morwell were exposed to thick, acrid smoke.

The fire in the open cut coal mine burned for 45 days in February and March, sparking major health concerns.

The Victorian Government announced the long-term study and appointed Monash University to lead it.

Lead researcher Professor Michael Abramson said Morwell residents were exposed to quite high levels of air pollution during the fire.

"What we're trying to determine with this study is whether that exposure has had any long-term health effects," he said.

"We're interested in whether the exposure to smoke has had an effect on people's hearts and circulation, whether it's had an effect on their lungs.

"We suspect from what we've already heard that there are some psychological impacts of being involved in a natural disaster like the fire, so we'll certainly be investigating that in greater detail."

During the fire, many residents raised concerns exposure to the smoke could cause cancer.

Professor Abramson said it could take several years to determine if that is the case.

Fire fighters work to contain a blaze at the Hazelwood open-cut coal mine near Morwell, Victoria on March 5, 2014. ( Country Fire Authority )

He said researchers will begin by establishing baseline testing to look at the overall health of Morwell residents.

"Now to be quite frank it's not truly baseline, the true baseline would have been before the fire but that's obviously no longer possible.

"We're trying to get some information about everyone who was in Morwell at the time of the fire, and we will link people's records with things like the death registry and the cancer registry."

He said researchers also plan to select people to participate in a cardiac study, a respiratory study and a psychological study.

Victoria's Health Minister David Davis said the Government acted on the recommendations of an independent inquiry into the fire.

He said the study would take at least 20 years, but could be extended if necessary.

"This is good science, but it will also enable the community to have their say on these matters," he said.

"There will be a community advisory committee formed to include community groups, local government and community health and hospitals, so that's an important input.

"I think the community will feel that this is the right way forward."