The Victorian government has announced the biggest overhaul of the state’s planning laws in a decade, in a bid to slash approval times to just 10 days for standalone homes while limiting appeal rights to only neighbours.

The premier, Jacinta Allan, and the planning minister, Sonya Kilkenny, on Tuesday said amendments to the Planning and Environment Act 1987 would generate more than $900m in construction activity each year.

“Victoria’s planning laws were written decades and decades ago. It was a very different time,” Allan told reporters.

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“We need to not only bring our planning laws into the 21st century, we also need to overhaul them, to take them from being old-fashioned Nimby-type laws into a planning system that says ‘yes’, and gets homes and projects built more quickly.”

Under the proposed changes, three new planning streams would be created to slash permit approval times 10 days for standalone houses and duplexes, 30 for townhouses and low-rise developments, and 60 for larger developments.

Allan said this would replace the exisiting “one-size-fits-all system”, where almost all projects go through the same planning process, regardless of their complexity.

She said a planning permit currently took an average of 140 days to be approved – and could blow out to more than 300 if there was an objection.

To limit objections, the amendments will scrap third-party appeal rights – which allow anyone to object to a planning permit – for homes, duplexes, townhouses and low-rise apartment streams.

For higher density apartments, only those who are directly affected – such as neighbours – would be able to appeal.

Kilkenny said Victoria currently had the “broadest” third-party appeal rights in the country, with the change to bring it “in line with all other states and territories”.

Allan said it was a “commonsense change”.

“People who live a long way from where the project is being built, the home is being built, shouldn’t have the opportunity to stop those projects,” she said.

The bill would also make it easier for councils and local government to update their planning rules, the government said.

Some changes are similar to those introduced in New South Wales in recent weeks, with the Victorian government also distributing a map detailing the complicated approvals process currently in place.

However, the NSW bill centres on the creation of a single authority providing advice on development applications on behalf of all government agencies. In Victoria, this already exists under the department of transport and planning.

The NSW bill also enshrines its fast-track planning pathway for projects worth more than $60m. A similar scheme has already been in place in Victoria for about two years.

The Victorian bill will be introduced to parliament on Tuesday, before going to a vote in the lower house by Thursday.

Allan and Kilkenny urged the Coalition to support the bill, noting their counterparts in NSW were supportive of planning reform.

“We know that there may be the temptation from the Liberal party to fall back to their Nimby-blocking approach,” Allan said. “Let’s cast that aside and support this legislation to get more homes built.”