A $9.8 million package to help clean up homelessness on the streets of Melbourne and move people into transitional housing has been announced by the Victorian Government.

Key points: Forty people to be given immediate transitional housing

Forty people to be given immediate transitional housing About 250 rough sleepers in Melbourne's CBD to be given "pathway to better life"

About 250 rough sleepers in Melbourne's CBD to be given "pathway to better life" Once housing is found, rough sleepers will have access to support services

It comes after authorities recently attempted to remove a camp of homeless people outside Flinders Street Station who had spreading their bedding and belongings across the footpath.

Forty people will be given immediate transitional housing under the plan while new housing is built.

Housing Minister Martin Foley said 30 new permanent modular homes would be built on public land by the end of the year.

"There'll be no reason why a rough sleeper in the city cannot this evening move in towards transitional housing with a guarantee that over the next two years there'll be permanent supported housing available for them," he said.

Mr Foley said the transient homeless population was about 250 in Melbourne's CBD.

"We want to make sure the people that are rough sleeping in the central city district know that living on the street is an unhealthy and unsustainable way of living," he said.

"Living rough in the central city district is in no-one's interest. Particularly for those people that are homeless.

"This is a guaranteed pathway to a roof and a guaranteed pathway to a better life."

Resources should not 'sustain people in homelessness'

Mr Foley said Brotherhood of St Laurence executive director Tony Nicholson would oversee the delivery of the package.

He said Mr Nicholson would coordinate services currently available to the homeless in the city.

"We have many, many services in the central city area, the sad truth is some sustain people in homelessness," he said.

"If it was good will and good intentions that was all that was needed to end homelessness in the city it would have been done a long time ago.

"What this approach will do is to make sure we don't spend our resources on sustaining the homelessness lifestyle and instead we end homelessness in the city."

He said once homeless people were given housing they would have access to specialist support, such as mental health and drug and alcohol services.

VincentCare Victoria chief executive John Blewonski said he believed it was important community groups worked together.

"Sustaining people on the streets is not a long-term solution to a housing crisis," he said.

"Until you establish someone in housing you can't begin to address their underlying issue, whether that's been around family violence, whether that's been around drug and alcohol, mental health and so on.

"Once we're able to establish sustainable housing for individuals, then we're able to address the underlying issue."