Victoria's Deputy Speaker Don Nardella has been caught out claiming a generous "second residence" allowance worth almost $40,000 a year while living by the ocean miles from the city electorate he represents.

The news follows revelations in Fairfax Media that the Speaker, Telmo Languiller, claimed nearly $40,000 while living in Queenscliff while representing the western suburbs electorate of Tarneit.

MP for Melton Don Nardella has been kicked out of the Labor caucus Credit:Darrian Traynor

Mr Nardella, who represents Labor in the outer-western suburbs electorate of Melton, has confirmed that he has been living in the Bellarine Peninsula town of Ocean Grove since April 2014 - suggesting he will soon have claimed more than $113,000 in taxpayer-funded entitlements.

But despite Premier Daniel Andrews conceding earlier on Friday that it was "self-evident" the second residence allowance was meant for regional MPs who worked at Spring Street, Mr Nardella did not say he would pay the money back.