Labor has indefinitely shelved a complex legal plan to render the East West Link contract "unenforceable" and will instead rely on a potentially expensive settlement deal with the consortium to extricate itself from the project.

In the lead-up to last year's state election, Labor repeatedly claimed the contract to build the road was "not worth the paper it is written on" and could not be entered into safely.

Victorian Premier Daniel Andrews.

To make the case, the then opposition relied on advice from former Federal Court judge Ray Finkelstein and administrative law expert Richard Niall, QC. It concluded that if Supreme Court action against the project by Moreland and Yarra councils were successful, the contract would be "unenforceable".

Labor's plan at the time was to support the councils' case if it won the election, rather than defend the project. Under those circumstances, Labor believed the councils' legal challenge would be likely to succeed.