The Victorian government has pledged $5.3 billion toward building 12,000 social housing homes throughout Melbourne and regional areas.
The package, to be included in the state's 2020/21 budget released on 24 November, will deliver 9,300 new homes, as well as the replacement of 1,100 existing public housing units.
Victorian Premier Daniel Andrews said 2,000 of the new homes would be for people living with mental illness, while 2,900 new affordable and low-cost homes would be built to help low-to-moderate income earners live closer to work.
There would also be 1,000 dwellings to support Indigenous Victorians and another 1,000 to support victims of family violence, the Victorian premier said.
"This will change lives - giving thousands of Victorians the security and stability of a home," Mr Andrews said.
"It's a profound investment in a stronger, fairer Victoria - a Victoria that recognises everyone deserves a place to call home."
The new homes will meet seven-star efficiency standards to be comfortable during summer and winter, Mr Andrews said.
The program would also create about 10,000 jobs a year over the next four years, with the first 6,000 dwellings expected to completed within 18 months, he said.
Housing Minister Richard Wynne said 25 per cent of the funding would be committed to regional Victoria.
"Whether you're in Wonthaggi, Portland or Wodonga, you will be a recipient of this investment going forward," he told reporters on Sunday.
Victorian Greens acting housing spokesperson Sam Hibbins welcomed the package but said there are more than 100,000 people on the waiting list for public housing.
"Homelessness is the number one social justice issue facing this state and the best way to fix it is by building homes for people in need," Mr Hibbins said in a statement.
Victorian Council of Social Service chief Emma King said the program would be a "massive leap" toward solving the state's housing and homelessness crisis.
"This colossal investment will mean fewer people cold, hungry and homeless, and more people in work," Ms King said in a statement.
"A single investment of this scale has not been seen in many decades, if ever. It's a game changer."
"Housing is a springboard to a good life, a life of wellbeing. With a roof over your head, you can overcome all the other challenges more easily."
Council to Homeless Persons chief Jenny Smith also welcomed the "historic level" of investment in social housing.
"Lack of social housing has been driving people into homelessness, and making it almost impossible for people to escape homelessness," Ms Smith said in a statement.
"Without a secure affordable home, it is almost unachievable for people to engage in education or employment, much less to maintain their health and wellbeing."