A Victorian First Nations organisation has won approval for a 168-home affordable housing project in inner Melbourne using a rarely used overlay to bypass zoning that would otherwise have blocked the scheme outright.

The amendment applies a Specific Controls Overlay to the Commercial 2-zoned site, where accommodation is otherwise a prohibited use.

Rather than pursue a standard rezoning, the Department of Transport and Planning opted for a site-specific overlay tailored to The Victorian Aboriginal Community Controlled Health Organisation (VACCHO).