An inner-city Melbourne council is a step closer to introducing minimum apartment size standards, as property developers warn of a profit hit if the policy is adopted.

This week, Yarra City Council – which includes the suburbs of Collingwood, Fitzroy and Richmond – voted to undertake a report to determine the path forward to strengthen standards for apartment quality.

It comes as the peak body representing Victoria's major developers warn of the implications minimum standards would have on their profitability.

Mandated minimum floor sizes – a policy supported by the major renters' association, which was implemented in Sydney more than a decade ago – would limit the practice of developers selling high volumes of cramped apartments at lucrative profit margins.

Councillors voted almost unanimously in favour of the move, with Labor-aligned councillors the only hold-outs.