While welcoming news of plans for the 141-hectare site in Griffith Street, Cr Toohey said it was crucial that traffic management was addressed as the shire continued to grow.

"We know that significant growth is coming," Cr Toohey said.

"It is not if it will come; it's a matter of when it will come and a lot of the growth is now."

A joint venture of the Ballarat-based Gull Group and Devine, the project is proposed to be completed over the next eight to 10 years.

It could eventually be home to 5000 residents.

Prices are to start at $300,000.

Bordering a golf course on one side and the Werribee River, the development's preliminary plan has been given the nod by council.

"This is very exciting for the town and once finished it should increase the size of Bacchus Marsh by more than 25per cent," Cr Toohey said.

But he warned that Grant Street in Bacchus Marsh was already a "car park" at some parts of the day.

"That's the main arterial road through the Bacchus Marsh main city area."

Gull Group co-owner Alistair Gull said a formal application was due to be lodged in the next six weeks.

"The area has been rezoned for residential development and the council has supported that," he said.

Mr Gull denied the development would worsen Bacchus Marsh's traffic.

"It is a good news story for Bacchus Marsh," he said.

The development plan will be displayed after it is presented to the council.

Cr Toohey said traffic management was a key component of council planning.

"We are working with the developers to improve traffic management now and into the future."