Clients had found the changes 'very unsettling' because their long-standing relationships with workers had been severed.
Hundreds of Victorian community mental health workers have lost their jobs following a Napthine government restructure which some critics fear could lead to an increase in homelessness.
An analysis by the sector's peak body, VICSERV, shows that 380 workers have lost their jobs due to the changes.
The reforms, which came into effect at the start of this month, will cut the number of organisations that deliver community-based mental health services from 45 to 16 as part of a recommissioning process.
VICSERV chief executive Kim Koop said half the clients and staff in the sector were "on the move" and displaced staff were not guaranteed new jobs in successful agencies, which are expected to recruit 372 people.
"It is a workforce we have built up over a long time and now we are losing them all in one swoop."
Clients had found the changes "very unsettling" because their long-standing relationships with workers had been severed, she said.
Mind Australia chief executive Gerry Naughtin said the organisation would axe 98 jobs – "a significant blow" and 800 clients had been transferred to new service providers.
"There is considerable sadness and anxiety amongst our clients and staff,” he said in statement.
Jesuit Social Services chief executive Julie Edwards said while the reforms would work for a number of clients, the most vulnerable, who often did not recognise they had a mental illness, would suffer.
She said the organisation had been hit with a $350,000 funding cut and its Connexions program, which reaches out to young people with a mental illness and substance misuse problems, had been "gutted".
"We are talking about people who don't recognise they have a mental illness, or don't pick up the phone for a diagnosis, which is what the new system is about. We think there will be an increased number of people presenting to emergency departments and sleeping rough."
But Mental Health Minister Mary Wooldridge said the reforms would ensure people with a mental illness received high quality support that was tailored to their needs.
"The Community Mental Health sector sought significant reform as they believed the previous approach was fragmented and failing to consistently deliver the high quality support needed for people with a mental illness."
She said the Napthine government had increased community mental health funding associated with this reform which meant "more jobs to better support people with a mental illness".
Opposition mental health spokesman Gavin Jennings said continuity of care was "very important" for clients.
"We are talking about people who are dealing with a great deal of stress in their lives to begin with. It can be very distressing if they have to find new services and lose those professional relationships."
Australian Community Support Organisation chief executive Karenza Louis-Smith said the reforms were "brave" and made it easier for people to navigate services.
"They have created a 'front door' which means people go to one point for drug treatment and mental health services,'' she said. "You pick up the phone, call a central number and will be assessed and triaged. Those with the highest needs will be the first people to receive treatment."