A small city in Western Australia's south-west has installed a transportable open-air shelter in a car park, in a new approach to homelessness.

The Bunbury Council had been frustrated with people sleeping at a local soundstage but instead of moving them on, the council spent $15,000 on installing an open-faced donga in a city carpark earlier this week

However, housing advocacy groups say a more coordinated approach was needed to give people homes, rather than just shelter.