Former Victorian deputy speaker Don Nardella has resigned from the parliamentary Labor Party amid calls for him to quit over a controversial entitlements claim.

Key points: Don Nardella to sit on cross bench as Melton MP

Don Nardella to sit on cross bench as Melton MP Premier says Mr Nardella refused to pay back $100,000 in contested expenses

Premier says Mr Nardella refused to pay back $100,000 in contested expenses Bundoora Labor MP Colin Brooks announced as new Speaker of Victorian Parliament

Mr Nardella resigned as deputy speaker last month for claiming an allowance, which was designed to help country MPs, to live outside of his Melbourne electorate.

Premier Daniel Andrews said he had asked the Melton MP to remove himself from the caucus for refusing to pay back $100,000 he claimed for living in Ocean Grove, on the Bellarine Peninsula.

"It would have been far better if he repaid the money, that's been my position consistently from the last couple of weeks as matters came to light," Mr Andrews said.

"He has made it clear he doesn't want to do that so I have taken the action to require him to resign and he has agreed to do that.

"The choice was there for him to make and he made the choice and it is where we find ourselves."

Mr Andrews said Mr Nardella would remain an MP in his seat of Melton, west of Melbourne, and sit on the crossbench.

"He has indicated to me that he intends to serve out his full term," he said.

"Who he votes for, how he votes, that's a matter for him."

Mr Andrews again said he would leave it to the Audit Committee of Parliament to decide whether Mr Nardella should be forced to repay the money.

Bundoora MP announced as new speaker

The resignation follows the announcement Bundoora Labor MP Colin Brooks had been chosen as Victoria's new parliamentary Speaker, and Bendigo West MP Maree Edwards will take up Mr Nardella's former position as Deputy Speaker.

Colin Brooks (pictured) replaces Telmo Languiller, who stepped down last month. ( Parliament of Victoria )

Mr Brooks replaces Telmo Languiller, who stepped down from the position amid controversy over a similar entitlements claim.

Mr Languiller, the Labor member for Tarneit, claimed the same allowance for a home in Queenscliff, 80 kilometres from Melbourne, because of "complex family reasons".

He promised to repay almost $40,000 after widespread criticism of the claim.

Call for police investigation

Opposition Leader Matthew Guy earlier said Mr Nardella did not deserve to be a member of the Labor Party if he did not repay the money.

He questioned Mr Brooks' independence during a rowdy Question Time, accusing him of being "a patsy of this Premier".

"Why won't you use your numbers on the floor of this Parliament to force him to repay more than $100,000 he systematically rorted from the parliamentary second residence allowance when he was one of your MPs?" Mr Guy asked.

Mr Brooks ejected Liberal and Government MPs as the Opposition went on the attack.

"Premier, are you aware that the rorting member for Melton's Ocean Grove address, the one he stated was his principal place of residence, is in fact a caravan?" Mr Guy asked.

He wants Victoria Police to investigate the expenses scandal, labelling the current parliamentary investigation a "sham".

But the Government said the audit committee had the powers to properly investigate the matter.