Teachers who pose a risk to children's safety will be barred from working in Victorian schools under a state government overhaul of the teaching watchdog.

The changes follow revelations in The Age that the teaching regulator allowed a teacher who told incest stories and paid students for massages to continue working in schools.

In another controversial case, a teacher who pleaded guilty to a sex crime was given the green light to continue teaching.

A scathing independent review of the Victorian Institute of Teaching by former Department of Justice secretary Penny Armytage and KPMG said the regulator needed to be more focused on the wellbeing of children.

“There is no object or function which mentions child safety and wellbeing, or that requires the VIT to take into account community expectations,” it read.