Premier Daniel Andrews unveiled reforms as part of his government's long-waited housing statement on Wednesday.
The changes are headlined by an Australian-first 7.5 percent consumer levy on short-term accommodation bookings with platforms such as Airbnb and Stayz.
Under the housing statement, under-used and surplus government land will be rezoned to build an estimated 9000 homes across 45 sites in both metropolitan Melbourne and Victoria's regions.
Apartment design standards will be bolstered under the scheme.
Victoria becoming a signatory to an "affordable housing investment partnership" will mean developers who prioritise affordable housing will have low interest loans and government guarantees.
The Andrews government expects its housing statement will lead to the construction of up to 800,00 new homes in the next decade.
Victoria will also outlaw rent bidding, increase the minimum notice to vacate time from 60 to 90 days, and ban landlords from raising rents for a year after asking the previous tenant to vacate.
A new agency will be set up to resolve disputes between landlords and tenants.
Airbnb Australia and New Zealand's public policy head Michael Crosby has previously backed a levy but suggested a 7.5 per cent rate will impact tourism and should be lower.
Stayz government and corporate affairs senior director Eacham Curry has described the levy as ill-conceived and said the sector should not be painted as the cause of or solution to Victoria's housing crisis.