Labor is preparing for a possible byelection in the western suburbs, amid speculation an audit of former speaker Telmo Languiller over entitlements will pile further pain on the Andrews government.

On Tuesday, Parliament's internal auditors are due to hand over a report into the controversial second residence allowance. The audit was triggered by revelations in Fairfax Media that Mr Languiller and his then deputy, Don Nardella, had claimed more than $140,000 after moving their homes away from their western suburbs electorates to the Bellarine Peninsula.

Mr Languiller has stood down as speaker over his decision to claim the second residence allowance – designed for rural MPs who have to come to Melbourne – while he lived in Queenscliff, away from his Tarneit electorate.

Melton MP Mr Nardella quit the Labor caucus after refusing to pay back $113,000 he claimed to live at Ocean Grove.