Social workers at crisis accommodation centres said they could not refer their clients to community rooming houses because the properties were not accepting new tenants while they were being upgraded over the next eight months.

James Stewart, a case manager for Ozanam House, a crisis accommodation centre for adult men in North Melbourne, said his clients were typically referred to one of 10

community rooming houses after their maximum six-week stay at Ozanam.

However, Mr Stewart found last week that none of the houses were accepting new tenants.

"We have to tell [our clients] you're going to have to go to these private rooming houses which are horrible, and these are vulnerable people. The situation isn't just dire, it's flat line."

Several housing providers confirmed their community rooming houses were undergoing renovations because of Federal Government funding.

Yarra Community Housing's Myra Kitchenman said the agency was using $17.5million it received in Nation Building funding this year to upgrade or renovate 47 properties across Victoria, including six in the western suburbs.

She said the funding was conditional on finishing the projects by June and acknowledged that this had led to YCH refusing to take on new tenants for six months because some existing clients needed to be moved.

"There's a period of time during the upgrade when instead of rooms being given to a new person, it will go to someone already on the books."

However, she said the project funding was exciting for many communities.

"We had a whole lot of people move into a newly renovated [property] today and they were smiling from ear to ear."

While the Commonwealth has provided Victoria with $99million for repairs and maintenance of housing, the State Government is responsible for managing the funds.

Footscray MP Marsha Thomson said the renovations would lead to an eventual increase in such housing and a higher standard.

"It is causing a short-term shortage, but HomeGround and Yarra Community Housing are trying to provide some temporary measures to address that."