Kate, not her real name, was one of 74 people in the Victorian Central Highlands, Wimmera and South West placed in long-term housing and provided with ongoing support as part of the From Homelessness to a Home (H2H) program.

"This program has changed my life so much," she told Australian Community Media.

The Victorian Budget released last week slashed funding for the 'highly successful' homelessness program which, according to Council to Homeless Persons, halved rough sleeping in Victoria.

Funding for H2H has been reduced by $43 million annually, 78 per cent of its earlier budget, which translates to 1440 people missing out on support, Council to Homeless Persons said.

Victorian treasurer Tim Pallas speaking to Australian Community Media in Ballarat on Friday said the program was a COVID-19 response to protect all people experiencing homelessness from the worst of the pandemic.

"Since this term of government, we've put $700 million into homelessness services in this state. Our intention is to continue that," he said.

Kate said she had experienced homelessness throughout her life due to trauma and family issues and her most recent experience was caused by family violence.

She was referred to the H2H program last year, placed into housing and allocated a worker to support her throughout the journey.

To be eligible for the program, people must have been placed into crisis accommodation in hotels and motels from March to December 2020 and have a history of rough sleeping or chronic homelessness.

The aim was to find a permanent home for people placed in hotels and motels throughout the coronavirus pandemic and provide ongoing support, inspired by housing first principles.

The staff team worked to prioritise 74 people or households in the Central Highlands, Wimmera and South West out of more than 700 who would have been eligible.

The state government supplied 15 existing social housing properties and purchased 18 homes from the private market for the program.

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Uniting supplied 35 homes, some which were existing properties and others through new head leasing arrangements.

Head leasing means the organisation signs the lease with the real estate agent and the client signs the lease through Uniting.

The tenant pays 25 per cent of their income as rent and the program makes up the difference.

"Because of the stability I have been able to do therapy and because of doing the therapy I have been able to engage in part time work," Kate said.

"I am in a place where I know I feel safe and I have support to make it affordable. It makes such a difference.

"Stability means everything. I don't know if you have ever faced homelessness, but it is difficult to find food let alone get a job.

"Unfortunately on the streets you get a lot more trauma which puts you in a difficult spot and you add tiredness, coldness, hungriness and all the rest of it on top of that and it is overwhelming.

"For the government to step in for everyone makes such a difference. Stability means people can get education, hygiene is great and easy, even brushing your teeth, just becoming human again."

Kate said having a job made her feel great and it meant she was so much closer to being able to support herself and no longer need the program.

But she said it takes time to get back on your feet. It took her six months to feel comfortable and worthy enough to put her mattress on the bed base in her new home, rather than sleeping on the floor.

"I would be lost if this program left me straight away. It would probably cost the government more," she said.

"I know the clock is running out and to hear there is no more funding it is a tragedy for a lot of people.

"You do need support for a period of time, it is not an overnight thing. I can't believe I slept like that on the floor, I am not that sort of person. It is bizarre but it is behaviour that is obviously picked up from being homeless."

Council to Homeless Persons chief executive Jenny Smith said the program saved an estimated $13,100 public expenditure for each participant annually by diverting people away from hospitalisation, acute mental healthcare and incarceration.

Homelessness support workers are disappointed and devastated by funding cuts to the program.

Uniting Ballarat senior manager homelessness Adam Liversage said it had been a game-changer.

"We have had families linked back into education, family reunification, a lot have been able to gain employment again and are getting qualifications so they can enter the workforce," he said.

"Even high-end complex people who couldn't sustain tenancies have managed to turn a corner and connect with communities and sustain tenancies.

"It really has made a life changing difference to many Victorians and it is very disappointing that the government hasn't extended a program like From Homelessness to a Home with the success it has had."

Staff and program participants are concerned and anxious about what will happen to them once the program ends, with many expected to struggle to maintain tenancies if they lose support too quickly.

A backlog in public housing waitlists and a lack of available and affordable private rental properties means there are little to no exit options, other than back into the cycle of homelessness.

"I am absolutely petrified of what happens to me next," Kate said.

"In the short term I want to do more therapy and keep my job. I have a lot of anxiety about what happens to me afterwards.

"The goal for me would be to keep working, see how much I can sustain that and one day go full time."

Kate's support worker Ayden McMahon said he was 'holding out hope' Kate would be offered a place in public housing by the end of the program.

Council to Homeless Persons said a key ingredient of the housing first model was that housing was permanent and support must be available for as long as people needed it.

Mr Pallas told Australian Community Media the Victorian government was 'deadly serious' about addressing homelessness.

"We want to come up with a solution that provides for a long-term solution. We're happy to make the investment," he said.

"The community associations I've been discussing this with accept they have an incapacity at the moment because of resources to wrap around services.

"We can't simply put people into homes and think that's a solution to a problem. There are a lot of long-term problems associated with alcohol abuse, domestic violence, drug abuse, all of those things need to be attended to at the same time.

"Therefore that's why as a government we're increasing our resources into our health workforce. We're trying to find some 7000 extra health workers in this budget alone."