Work starts next week and is expected to be completed by December.
The project involves a four-bedroom fully supported house and two semi-independent units for people with high complex support needs.
Fairbrother regional manager for south-west Victoria, Billy Edis, said the project would benefit people with disabilities and the local economy.
"We're very pleased to be involved with such a special project for the community," Mr Edis said. "This is a significant development and the construction will create 25 new jobs, including six apprenticeships, and we will look to use local contractors throughout the project."
As part of the project, powerlines will be moved underground, a power pole removed and residents in the street will have access to stronger power amperage.
Southern Stay Disability Services CEO Paul Lougheed said there was huge demand for this type of accommodation, particularly for people with high complex support needs living at home with ageing parents.
"This is the first supported disability accommodation house to be built for people with high complex needs under the NDIS in south-west Victoria. It will meet a great need in our community," Mr Lougheed said.
"We have identified 75 families looking for this type of accommodation in south-west Victoria, with parents very keen to find suitable housing for their children."
Mr Lougheed said the property would have the highest possible accessibility standards but would be a "real home" for residents.
It will be built to platinum level of the Livable Housing Standards, the highest level of accessibility under the SDA, and will be fully wheelchair accessible.
The house will be staffed 24/7 to ensure a safe and supported environment for the nine residents, creating more than 20 ongoing jobs.
Southern Stay Disability Services has contributed $450,000 to the project and has received support from;
* Alan Lane Foundation
* Archie & Hilda Graham Foundation
* Gall Family Foundation
* Ern Hartley Foundation
* Vedmore Foundation
The remainder of the funding will be sourced through Specialist Disability Accommodation payments.