Thousands of parking fines estimated to reach almost $20 million will be refunded by three Melbourne councils after a review by the Victorian Ombudsman found they acted "contrary to law" by using private contractors to settle parking ticket disputes.

Key points: Ombudsman Deborah Glass said while it had not been tested in court, she believed the councils breached the law

Ombudsman Deborah Glass said while it had not been tested in court, she believed the councils breached the law The three councils do not accept they have broken the law but will repay more than 200,000 fines issued over a decade

The three councils do not accept they have broken the law but will repay more than 200,000 fines issued over a decade The use of private contractors to assist with internal reviews could be more widespread than the councils investigated

From 2006 to at least 2016, Glen Eira, Port Phillip and Stonnington councils were found to have breached the Infringement Act, which requires councils to handle parking fine reviews internally.

The three councils do not believe they broke the law but have agreed to repay the fines out of "goodwill", ombudsman Deborah Glass said.

Ms Glass, who tabled her investigation into the councils' outsourcing of parking fine internal reviews in the Victorian Parliament today, said although the findings had not yet been tested in court, she believed the councils' actions were illegal.

Ombudsman Deborah Glass said the councils had withheld information from motorists. ( ABC News: Billy Draper )

"I can express my opinion, which is that the three councils acted contrary to law," Ms Glass said.

Ms Glass added that the findings also revealed none of the three councils had disclosed who conducted the reviews, with "each of them providing a similar squiggle by an anonymous officer".

Port Phillip will have the biggest bill at $8.8 million, followed by Stonnington at nearly $7 million and Glen Eira with just over $3.5 million to repay.

A statement issued by Glen Eira City Council Mayor Jamie Hyams said details of a refund scheme would be considered by the council this evening.

The City of Port Phillip has announced a refund scheme. ( ABC News: Ron Ekkel )

City of Port Phillip Mayor Bernadene Voss today announced a refund scheme for all motorists who unsuccessfully appealed an infringement from July 2006 to August 2017.

This exempts motorists whose infringement appeals were reviewed directly by council officers or appealed to the Magistrates' Court.

Cr Voss invited motorists to complete a refund application on the council's website.

The City of Stonnington has set up a system so that those whose parking fine appeals were solely dealt with by the contractor, Tenix, can be refunded.

The investigation follows decisions by Monash and Kingston councils in March to refund motorists after being found to have also used private contractors.

Issue could affect other agencies

The ombudsman's investigation focused on Glen Eira, Port Phillip and Stonnington councils due to their defence of outsourcing arrangements when Monash and Kingston councils made their announcement.

All 79 local councils in Victoria can issue parking infringements along with many Victorian Government agencies, such as universities, TAFE institutes, alpine resorts, and public hospitals.

The councils said they did not believe they had broken the law. ( ABC News: Ron Ekkel )

Ms Glass said the investigation revealed other councils and agencies also engaged contractors to assist with internal reviews, but no definitive list exists.

"I decided it was in the greater public interest to conclude and table this investigation, than to expand it to other agencies and thus considerably delay its release," Ms Glass said.

Ms Glass will write to the agencies identified in the evidence and request they review their past use of contractors.

Lawyer Adam Cockayne, who calls himself the "Fine Defender", alerted the Ombudsman to the outsourcing issue.

Adam Cockayne first raised the issue in 2016. ( ABC Melbourne: Kristian Silva )

Sorry, this audio has expired Lawyer Adam Cockayne tells Virginia Trioli he's been trying to get councils to change their procedures for years.

Mr Cockayne, who established an online legal service in 2017 to challenge fines issued to motorists, told ABC Radio Melbourne this morning the issue potentially affected "every council in Victoria".

He said it took four years of clients lodging appeals before the investigation began.

He gave credit to Monash City Council who sought legal advice from multiple QCs and then changed their procedures.

The advice given to Monash and Kingston by the QCs meant councils were unlikely to lodge an appeal against the finding, he added.