Thousands of residents forced into a sudden COVID-19 lockdown in public housing towers in Melbourne in 2020 are eligible for $5 million in compensation.

The Victorian Government settled a class action over measures intended to stop an outbreak of the virus in nine towers at the height of the second wave.

The plaintiffs claim people were wrongly detained for up to 14 days and threatened with physical harm if they tried to leave the towers. However, legal documents show the government denies those claims.

Notice of the settlement was posted to the Department of Health’s website last week.

The settlement still needs to be approved by the Supreme Court.