Some 560 families impacted by the collapse of builder Porter Davis will be able to get their deposits back.
It applies to customers who paid deposits before the builder went into liquidation last month but were left without insurance coverage.
Premier Daniel Andrews said he believed the scheme would cost about $15 million, averaging about $25,000 per customer.
About 1700 homes across Victoria and Queensland were left in limbo when Porter Davis went into liquidation last month.
The Victorian Building Authority is investigating whether Porter Davis has breached any laws after customers claimed they were left without domestic building insurance despite paying their deposits.
On Wednesday it was revealed the company collapsed owing close to $33 million to the Commonwealth Bank, on top of other debts.
Liquidators Grant Thornton are still trying to determine Porter Davis' overall financial position.
