The Victorian Civil and Administrative Tribunal ruling follows a series of complaints by residents and businesses.

Hobsons Bay's Inspector Bill Mathers said police sought the VCAT hearing following complaints dating back to 2007 for breaches of liquor licensing laws and the company's failure to act on written warnings.

Common complaints included excessive noise, alcohol being consumed outside the designated drinking areas, fighting among patrons, swearing and allegations of patrons urinating in public.

"From a police point of view the process took a number of years to get before VCAT but ... in the end it was a very positive outcome," Inspector Mathers said.

"I believe the result sends a clear message to licensees about running licensed premises in a responsible

manner."

VCAT also ordered that the venue would have its entertainment licence changed to play only 'background music' after 11pm.

"There will be no more live bands and the venue will now operate under standard high-risk conditions because it is now classified as a high-risk venue," Inspector Mathers said.

Hotel directors have agreed to the terms and to get a certificate from a registered building surveyor on the patronage number for public internal and external areas.

"That will be another condition that's imposed on them and there will be strict conditions on the number of patrons they can have," Inspector Mathers said.

He said the hotel was warned of possible prosecution before his arrival in Hobsons Bay in August last year.

"It was before my time but I know for a few years now there have been a

number of issues in relation to how the premises was being operated and how that impacted on the local community.

"If the Hobsons Bay Hotel does not adhere to the conditions imposed by VCAT and continues to cause disturbances it may lose its licence ...

[but] we're quite confident now that the hotel has moved forward and we're looking for a new era for this establishment."

Calls to New Hobsons Bay Hotel management for comment were not returned at the time of going to print.