A total of $2.85 million will be spent to reduce the flood risk in North Warrnambool.
The Warrnambool council and the Glenelg Hopkins Catchment Management Authority are collaborating on the project to install culverts and levee banks along Russell's Creek next summer.
Glenn Reddick from the Warrnambool council says the works are designed to minimise the damage from a one-in-100 year flood of the creek.
"It does benefit 763 properties, of which there's 356 buildings, and it would actually mean that 99 of these buildings would no longer be at risk of flooding above the floor level," he said.
"So it's quite exciting, it's a very significant project."
© ABC 2013
15:46 EDT The Australian research body the Climate Council has argued in its latest paper that the probability of drought will increase, and it will become more severe, because of climate change.