The $1.8 million project, which is being administered by the State Government, is part of the Federal Government's economic stimulus plan.

The new one-bedroom units, at Wicklow Avenue, will be built and owned by Loddon Mallee Housing Services, Victoria's first registered housing association.

LMHS deputy chief executive Trudi McClure said the units were the company's first development in the Croydon area.

"As average house prices have increased, many people have been excluded from the property market and forced to depend on private rental.

"Increased demand for rental housing has led to increased rents and therefore a rise in the number of people seeking more affordable alternatives.

"Affordable rental housing is critical for social wellbeing, community stability, as well as better work, education and health outcomes, especially for young people.

"The design and landscaping of the Croydon project will complement the existing aesthetic of the street and add value to neighbouring properties."

Eastern Metropolitan Region MP Brian Tee said the units would create new homes and jobs for the local community.

"The new units will reduce waiting times and ensure more people in our community will have a roof over their heads in coming winters.

"The project will create up to 20 new jobs in Maroondah, providing employment security during these tough times.

"This initiative is evidence of what can be achieved when the state and federal governments work together, delivering new homes and new jobs."

Deakin federal MP Mike Symon said the project provided "much-needed housing" in the outer east.

"This is also great news for our local building industry, for all those associated businesses who will be part of the supply side of things to get this project completed, and for the local Croydon community.

"Like Mr Tee has said, every Australian deserves to have a roof over their head and we look forward to being able to provide housing here by June 2010."