Men and women are meeting daily at the public toilets, located in the Howitt St shopping precinct, for sexual encounters.

The meetings are taking place both day and night.

Three people were fined for offensive behaviour this week following a covert police investigation.

And police warned yesterday that others engaging in similar acts would be caught.

"This sort of behaviour is being treated very seriously by police and people taking part in lewd acts will be detected and prosecuted,'' Sergeant Steven Howard said.

"The toilets are located near shops and there are a lot of children and pedestrians around the area, so we want this behaviour to stop.''

Nearby traders first raised concerns with police after seeing men spending a ''significant amount of time'' in the toilets.

Sgt Howard said two men and one woman, all middle-aged, were nabbed this week.

People meeting at the toilets were not only from Ballarat, but Melbourne and other regional cities.

Sgt Howard said it appeared the sexual encounters were pre-arranged and well organised.

Police would continue to monitor the toilets for inappropriate behaviour, he said.

"We'll continue our patrols and our surveillance, and we'll continue to prosecute all people who are committing an offence,'' he said.

New legislation, introduced in July this year, now enables police to issue fines for offensive behaviour rather than take offenders to court.

The fines are worth $227.

Anyone who has witnessed suspicious activity should telephone Ballarat Police on 5336 6000 or Crime Stoppers 1800 333 000.