One source, who had specific details about the security scare, said a teenager from regional Victoria had gained access to the system.

''Essentially the level of access that's available is complete and unrestricted access to all their files,'' the source said.

Council staff detected the security breach on Monday after a resident came forward with claims the system had been hacked.

Ballarat City Council chief executive officer Anthony Schinck said the network would be shut down until the end of the week after unauthorised access to payroll data and emails.

Yesterday many council workers could not access their email accounts, while others could only send and receive internal emails.

''Our system will be offline all week. It will impact on a number of council services across the community. There is obviously considerable cost in rebuilding the system,'' Mr Schinck said.

He said it was too early to determine how much the breach would cost.

Have you been the target of computer hackers? Let us know by posting a comment below.

The council has been unable to conduct any online transactions and some council services that rely on wireless networks were completely without internet access. Child and maternal nurses, home care workers and childcare

centres, which rely on wireless networks, are among the worst affected council departments.

The council has reported the matter to police, but the identity of the hacker, or the target of investigations, could not be confirmed.

A police spokeswoman said the Ballarat Criminal Investigation Unit was dealing with the matter.

''Investigation is in its infancy and police will continue to make inquiries,'' she said.

Mr Schinck said the council network was accessed via a ''third party provider'', which provides network support to Ballarat and other local councils.

Mr Schinck said the unauthorised system break-in may have occurred on Saturday night.

''They have looked at email environments, they have looked at payroll data, they have looked at a range of aspects of the system,'' he said.

''It appears that log ins and passwords have been potentially stolen (which) has allowed access to the system.''

Yesterday the council called in computer security experts to examine the system and determine exactly how much information had been viewed. Mr Schinck said he did not believe documents had been tampered with or removed.