MoVida chef and owner Frank Camorra said that school children and visiting tourists passing through the famous strip were increasingly being subjected to witnessing - and sometimes experiencing - violent and lewd behaviour.

"Over the last year or so things have gotten a lot worse as far as people's behaviour in Hosier Lane," he told 3AW Radio on Monday morning. "It is a city, it is a laneway, but it is becoming more prevalent."

Mr Camorra said his business partner saw two people engaged in a sex act in "broad daylight" last week. He himself had witnessed tourists being abused.

"It's just become a joke."

He said there were often confrontations in the CBD alley that were only only affecting business interest but also tourists. "I have seen personally tourists being abused by people that are living there, people being spat upon to the point where confrontation is happening and it is just getting worse."

Mr Camorra said increasing homelessness across the city was part of the problem. While he said MoVida staff had, in the past, contacted police and Youth Projects – whose Living Room drop-in centre is located in the laneway - little had been done to address drug and homelessness issues.

"I think the homeless problem in the city is getting out of hand completely and I think ... that is the major issue, that homeless people are becoming more and more prevalent," he told 3AW Radio.

"But I think there has to be a bit of give on both sides, and the behaviour that some of these people are showing towards innocent people just walking down is just not acceptable."

His comments come after a News Limited report said that laneway had been transformed into a " thriving drug den".

But Tyson Daymond, who has been living on Melbourne's streets for more than two years and had called Hosier Lane home this past week, said he had never witnessed a violent act towards tourists or members of the public.

Mr Daymond said there might be an argument about who could have an undercover position in the laneway during a cold winter but that those arguments only involved homeless people.