ACCOMMODATION for foreign students in inner-Melbourne is often cramped, overpriced and is creating ethnic "ghettos", Melbourne University's student union president says.

Jesse Overton-Skinner said many overseas students arranged their living quarters before leaving their home country so they had somewhere to stay when they arrived in Melbourne.

But she said they often weren't aware of all the alternatives and ended up being locked into paying up to $400 a week in a "one-bedroom apartment that you can't swing a cat in".

Some apartment blocks, such as the cluster of privately operated towers along Swanston St, created an unhealthy monoculture.

"In some apartments where it's mostly South-East Asian students it's almost ghetto-isation, because they're not engaging with anyone from countries other than their own due to the way they are living," she said.

Ms Overton-Skinner called for more action at a state and federal government level to create more affordable housing.

"It's a hot issue for students, but it's not a new problem. So it is a concern that it hasn't been adequately addressed.".

Melbourne University Overseas Student Services president Yee Hooi said most student apartments were small and expensive for their size.

But many of the apartment blocks offered excellent location, as well as programs to ensure students mixed widely.

Tenants Union chief executive Mark O'Brien said a significant number of his union's clients were foreign students living in the inner suburbs.

"It's a common story for people to sign up for things in their own country, and when they get here they feel like what is on offer to them has been completely misrepresented," he said.

State Government spokesman Chris Owner said the government was undertaking the "biggest investment in decades" in social and public housing to improve options for low -come earners, including students.