The Office of Housing's December-quarter figures showed almost 4500 families were waiting for suitable housing in the southern region, which covers Cardinia, Casey and Greater Dandenong.

About 455 families are in need of 'early housing', meaning they are at a risk of homelessness or have special needs.

Housing Minister Richard Wynne said the data showed a 2.5per cent increase for the region and underlined the importance of the Government's $580million investment in public and affordable housing.

"The Brumby Government acknowledges the pressure on both the private rental and public housing sectors has been exacerbated by the global financial crisis.

"We will add 5000 new homes to public and housing association stocks in the next two years."

Opposition housing spokeswoman Wendy Lovell said:

"Richard Wynne needs to realise there's a crisis in housing. Every month more and more people are forced to wait with no security."

Pakenham Caravan Park caretakers say an average of three people apply for on-site residency each day but with all 54 vans occupied, they have no choice but to turn people away.

The caretakers, who wish to remain anonymous, say a caravan is hardly a suitable long-term living solution for families.

An Office of Housing report shows the average cost of rentals in Victoria has increased by 11.13per cent between March 2007 and March 2008.