The Victorian Liberal Party will hand over almost $200,000 to the Victorian and Federal Parliaments after an internal audit found taxpayer money was used in an alleged kickback scheme linked to disgraced former state director Damien Mantach.

It is alleged Mr Mantach advised a mail house that was used by the Liberal Party to overcharge state and federal MPs. The printing company was allegedly paying kickbacks to Mr Mantach.

Disgraced former state director Damien Mantach told MPs to use the printing business, which then followed his advice to over-charge MPs. Credit:

On Tuesday evening, Victorian Liberal Party president Michael Kroger wrote to party members informing them of the "reimbursement". He said the party had a "moral obligation to settle the amounts in question".

The latest blow to the Liberal Party follows allegations last week that Mr Mantach had embezzled $1.5 million worth of party funds over four years.