The Northern Grampians Shire has backed new planning controls for the township of Glenorchy, to address flooding concerns.
The council has voted to amend its planning scheme to include flood overlays.
Mayor Wayne Rice says council staff will now have to take into consideration flood data when approving permits for new homes.
"We will be forced to look at these very closely," he said.
"It's not to say it can't happen, but in some cases it will be that it can't happen, but in some other cases we may advise them to build the house up to a certain height to prevent flooding in the future and it's going to save them a lot of heartache and battles with insurance companies if we regulate this correctly now.
"Any person wanting to build anything in that area will come under the spotlight of the planning department and the flood overlay.
"We will know exactly what areas are inclined to get flooded and then we can say, 'look we can't issue a permit to build in that area because we will suffer flooding at some stage'."
The proposal have been sent to the state's Planning Minister for approval.
© ABC 2012
08:03 EDT The state opposition has accused the government of using federal drought policy to mask cost cutting measures.