The Liquor Licensing commissioner Sue McClellan yesterday announced the new amended lockout time of 2am affecting up to 16 CBD businesses would begin on September 27.

The lockout that has been stayed since June pending a VCAT application will now go ahead, prohibiting entry to licensed premises after 2am.

The scheme will be reviewed after two years.

Ms McClellan said the new agreed time was necessary to handle a late-night security situation in Bendigo's central business district she described as "atrocious".

Bendigo police and the City of Greater Bendigo, which were part of initial discussions, welcomed the resolution.

But licensees remained concerned about the impact the lockout would have on their businesses, particularly on the busy grand final weekend.

"We don't think a lot of thought has gone into the timing of this," Black Swan owner Andreas Bazzani said.

"Traditionally, a lot of Bendigo people like a few drinks on Grand Final day and we will be just left to deal with this at the door."

Mr Bazzani said many licensees had hoped for a more flexible lockout time of 3am, but the prohibitive legal costs of a VCAT hearing on their small businesses meant they were unable to sustain the contest.

"We are certainly happy that it is not 1am and that now at least we know where we stand and can change our businesses to suit the new situation."

But concern remained that licensed establishments which close at 3am might be left with a "void hour" as patrons abandoned them for later opening places to meet the 2am lockout.

Boutique owner Matt Donegan said 3am licenses like his would need to extend their licenses to 5am to compete on an equal basis with other venues.

Bendigo police inspector Paul Newman welcomed the resolution to a process that began with his application for the lockout in December, 2006, and said he hoped to work further with hotel owners to address CBD behavioural problems.

"The lockout is not going to be the panacea for all the problems, we will be policing it stringently to begin with and we will be looking at the statistical situation on offences as the year continues."

Insp. Newman said he would like to see further co-operation with licensees including a stronger liquor licensing accord.

City of Greater Bendigo mayor Julie Rivendell said although the council had advocated a 3am lockout time, it welcomed a resolution that would improve conditions in the city's entertainment precinct.

"We are pleased to hear there has been a negotiated agreement on this issue and look forward to work with all the parties to make Bendigo a safer city," she said.