Federal and state departments have reacted quickly to a report on the exploitation of immigrant workers on Victorian farms, setting up a taskforce on visa fraud and stopping busses of migrant workers.

The Four Corners program presented more evidence that workers on 417 working holiday visas were being underpaid, housed in crowded accommodation and, in some cases, sexually harassed.

Visitors on 417 visas can gain a 12-month extension to their stay in Australia by working in regional areas for six weeks or more.

After years of complaints about the issue to the Immigration Department and the Fair Work Ombudsman, the Federal Government responded this week by announcing a dedicated taskforce will be established to investigate visa fraud.

Assistant Minister for Immigration Michaelia Cash announced her department would work with the ombudsman "to ensure that matters involving visa fraud and worker conditions and entitlements are investigated swiftly".

"The message is clear," Senator Cash said.

"By hiring illegal workers, businesses are risking more than their profits.

"They risk their livelihood, and are gambling with a possible criminal conviction."

Pre-empting the taskforce, immigration officers backed up by Victoria Police, VicRoads and Transport Safety Victoria blocked the South Gippsland Highway at Longford on Thursday looking specifically for minibuses carrying workers to nearby Covino Farms.

The operation is one of the state's biggest salad, vegetable and carrot producers supplying the big supermarkets, and for years has used labour hire companies to supply farm workers.

After the Four Corners investigation went to air, the company released a statement saying it had changed its system and was taking full responsibility for paying its workers directly and had terminated its agreements with labour hire companies that use migrant workers.

The same week Four Corners reporter Caro Meldrum-Hanna uncovered the registration of a new business called Horticultural Employment Enterprises by the co-owner of Covino Farms, Steven Covino.

Also listed as a director of the new company was Samnang Huor, one of the labour hire contractors formerly used by Covino Farms.

In an emailed statement, Covino Farms said the registration of Mr Huor as a director of the company was a mistake made by the company's accountants and that he was only an employee of the company.

$1.5m grant to Covino Farms suspended

The Victorian Labor Government reacted to those revelations this week by suspending the payment of a $1.5 million grant to Covino Farms organised by the previous Coalition government.

The former Member for Gippsland South and National Party Leader Peter Ryan was a strong supporter of the Longford farming operation while he was in government and facilitated the grant two years ago as part of the Latrobe Valley Industry and Infrastructure Fund.

Under the agreement, Covino Farms was required to employ 60 new full-time workers but a year later, Mr Ryan approved a variation in the contract allowing it to include contract workers.

Labor Minister for Regional Development Jaala Pulford confirmed no payment had been made yet and that funding would be withheld until Covino Farms complied with its legal and contractual responsibilities.

Minister for Industrial Relations Natalie Hutchens also announced her department was involved.

"The Andrews Labor Government is taking these matters seriously," Ms Hutchens said.

"We will also be undertaking an inquiry into labour hire, sham contracting and phoenix activities.

"We need a national strategy to deal with worker exploitation and we need it now," she said.

The road blocks at Longford this week had mixed results.

Insiders in the vegetable industry say up to 35 minibuses regularly pick up seasonal workers before dawn each day from rental houses scattered through the nearby town of Sale.

Workers can be seen standing by the roadsides in groups early in the morning waiting for their pick-up.

They take some to Covino Farm and some to other vegetable farms in the immediate region.

Immigration officers found one "unlawful non-citizen" on one of the buses stopped at Longford, but say the operation has provided investigators with vital evidence in their crackdown on illegal work practices.

Transport Safety Victoria checked the registrations of the minibuses and the licensing of the drivers.

They say they are trying to sort out the layers of owners, operators and drivers involved in the transport businesses.