The legislation follows the release of the Victorian Ombudsman's investigation into how local councils responded to ratepayers in financial hardship.

Across the 79 Victorian local councils financial hardship policies varied greatly, the report found.

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Where some councils waived or deferred payments others were charging almost 10 per cent penalty interest on unpaid rates - sending struggling households into further debt.

It also found councils had an over reliance on debt collectors and some were suing victims of domestic violence and those with mental health issues over unpaid rates.

The Ombudsman recommended a more "empathetic" approach to rates collection, including new laws requiring councils to publish financial hardship information, and issuing standards for rates hardship relief.

Local Government Minister Shaun Leane introduced rating reforms to Parliament on Wednesday requiring fairer financial hardship policies and more support by councils to reduce the risk of further debt.

"We know that many Victorians are doing it tough and that's why we are working to reform the rating system," Mr Leane said.

"Good hardship relief schemes strike a balance where the rate burden is shared while ensuring people in hardship are not driven further into debt or out of their homes."

However, further concessions for ratepayers could mean local councils cannot adequately fund local government services.

In Bendigo, rates help fund a plethora of critical local services including waste collection, street cleaning, early years education, maintenance local parks, gardens and recreation facilities, environmental health, statutory planning, road maintenance, tourism and visitor services, Bendigo Art Gallery and The Capital and Ulumbarra theatres.

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The City of Greater Bendigo said during the COVID-19 pandemic it's 2020/2021 and 2021/2022 budgets were significantly redrafted to boost the level of financial support available to the community.

The municipality's acting corporate performance director Nathan Morsillo said the council had budgeted for certain families to receive rate concessions and were "confident services would not be impacted".

"We have updated our hardship policies annually throughout the pandemic and we did that again after the Ombudsman's report," he said.

"We try to help people engage with financial counselling where necessary."

Mr Morsillo said Bendigo Council had already made several changes to it's rates policies since the Ombudsman report and did not expect the new state government legislation to significantly impact councils in the region.

"Without having seen the actual legislation, as it only got presented to Parliament on (Wednesday), we're pretty confident in our own policies here," he said.

"The city already does wait multiple years before we take action against people who haven't paid their rates."

"I'm comfortable with these changes there isn't going to be a significant change to the city's ability to recover rates."

Residents who are finding it hard to meet their rates payments can speak to customer service on 5434 6000 to find the best solution based on their personal financial circumstances.

Under the established Financial Hardship Guidelines, the city can offer a range of payment options, including:

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