An upgrade of Frew Foods International's Stawell plant is set to create 250 new jobs and nearly double the site's production capacity.

The company's plans to expand its lamb processing site over the next three years is expected to cost between $40 million and $50 million.

The proposal includes the construction of a new cool room and automation equipment to help with packing and loading product onto trucks.

But Stawell's largest employer, which normally employs almost 500 staff, says it's struggling to fill about 100 vacancies.

Managing director Robert Frew previously told the ABC an accommodation shortage was making it hard to attract staff.

He said the vacancies had resulted in a 20 per cent drop in production but he expected the positions would be filled by October.

Mr Frew said staff had temporary accommodation at a local motel and apply for leases as soon as houses in the area became available.

The processing plant, which is rated one of Australia's highest quality facilities, already supplies meat to Aldi and Woolworths.

The company hopes to hire a further 250 people over the next three years to bring its workforce to 750 people.

The upgrades will allow it to increase lamb exports across Europe and North America.

Land releases can't come quick enough

Regional Development Minister Mary-Anne Thomas visited the Stawell facility to announce the upgrades and attributed the housing shortage to the "once-in-a generation" migration of 20,000 people from Melbourne to the regions.

She said having adequate housing was primarily the responsibility of local government who were required to ensure there were 15 years of supply.

Ms Thomas said the state government was working with the council to release land for development.

She said the government was investing $25 million in 24 housing projects across Victoria, which will lead to the development of 160 housing lots in Ararat and 120 lots in Stawell and provide housing for more than 400 people.

"The message I would send out to builders is that people are crying out for homes," she said.

"There are some great opportunities in rural and regional Victoria to build housing stock that will be taken up by people who are looking to permanently locate in rural and regional Victoria."