The residents of public housing towers in Melbourne have agreed to a $5 million compensation offer.

The deal was made to end a class action lawsuit over the COVID-19 lockdown residents endured in July 2020.

The settlement comes after a prolonged legal battle in which the plaintiffs alleged that the government's sudden hard lockdown measures were tantamount to unlawful detention. 

Under the quarantine measures, about 3,000 residents were confined to their homes, with police encircling the buildings to enforce the restrictions.

The state government's lawyers, while maintaining the legality of the measures, presented the settlement proposal to avoid a protracted court battle. 

They emphasised the unprecedented challenges posed by COVID-19 at that time, with no available cure or vaccine.

The settlement will benefit approximately 1,800 adults and 750 children, with eligible adults receiving around $2,200 each, and children under 16 receiving approximately $1,100.

However, the compensation agreement raises concerns regarding the lead plaintiffs, Idris Hassan and Hawa Warsame, who faced immense stress and trauma while leading the class action. 

They have requested additional compensation of $40,000 each, although the government contends that an amount ranging from $10,000 to $20,000 would be more appropriate.

Despite reaching a compensation agreement, the government has refrained from issuing an apology, a point of contention for both residents and the Victorian Ombudsman. 

The Ombudsman's review acknowledged the justification of the lockdown but criticised its hasty implementation, which disregarded the residents' human rights.

Some residents have expressed disappointment with the process, highlighting the lack of transparency and communication throughout. 

The settlement now awaits formal approval from Supreme Court Justice John Dixon, who has granted a two-week extension for the parties to resolve any remaining outstanding aspects of the deal.