The city council has put its rubber stamp on about 90 hectares in the north-east owned by 18 different landholders.

Approval of what is officially called a structure plan paves the way for the release of about 900 housing lots starting mid-next year to help alleviate an increasing shortage of residential land.

The area abuts the north Warrnambool residential centre which has reached its capacity.

The new area is between the Hopkins Highway, Wangoom Road, Aberline Road and Dales Road.

One of the largest landholders is the Catholic Church which is selling about 16 hectares off Wangoom Road.

Another structure plan for the Dennington-west Warrnambool area with provision for another 900 blocks is expected to go to council for approval in the next few months.

Structure plans entail designating land to be rezoned from rural to residential and working out developer contributions for construction of main roads and drainage.

The next stage will be public exhibition of plans. Then after objections are resolved it will be up to developers to get their blocks on the market as quickly as possible.

Structure plans were instigated by the State Government in the late '90s to enforce a framework system where councils identify growth areas then pull together various parcels of land to be developed in an orderly time frame. Previously there had been ad hoc developments scattered throughout the municipality.

City growth director Bill Millard told The Standard the council was now required to have 15 years' supply of land zoned as residential available for development and sale.

Planning services manager Matt Kirby, who has headed the structure plan process, said regional areas, including Warrnambool, had been caught short by the unprecedented demand for housing land in the past decade.