The Liberal Party candidate for a marginal seat in Melbourne's north has resigned after featuring in an anti-Muslim video for a rival political party.

Key points: Liberal leader Matthew Guy says the party sought Ms Klein's resignation after discovering the video

Liberal leader Matthew Guy says the party sought Ms Klein's resignation after discovering the video Ms Klein says she withdrew to avoid damaging the Liberal Party

Ms Klein says she withdrew to avoid damaging the Liberal Party The video was posted by the Australian Liberty Alliance, which is also running in the seat

Meralyn Klein quit as the Liberal candidate for Yan Yean after appearing in an online video, which calls for an end to Muslim immigration.

In the video, posted by the Australian Liberty Alliance, Ms Klein tells right-wing activist Avi Yemini about her experience of being attacked by two teenage boys in a Greensborough park several years ago.

"They were of a culture that didn't accept white Australian women," Ms Klein says in the video, before the text "They were Muslim" is shown on screen.

"It's disappointing to say, but I think there are people in this country who are not coming here to get the best out of the country and to give the best that they can," she says in the video.

"I'd like to see us look at immigration overall," she says, before text calling for a ban on Muslim immigration is shown on screen.

The video is posted on YouTube with the title "Muslims BASH and threaten to RAPE politician".

Meralyn Klein said she did not want to damage the Liberal Party's prospects. ( Liberal Party )

'Grossly inappropriate', Guy says

Interviewed on ABC Radio Melbourne, Ms Klein denied she was anti-Muslim.

"I made a short video on crime in Australia, in Victoria, the crime that happened to me," she said.

"That video was taken by an individual, given to the Australian Liberty Alliance, to which I have no association and they made it into something it's not.

"I am not anti-Muslim. They gave me no opportunity to look at the video, which was supposed to be about crime.

"I embrace all cultures within our country."

Ms Klein said she had withdrawn as the Liberal candidate to avoid damaging the party.

"I have no interest in putting the Liberal Party in any danger of having anything done to them that might injure the Liberal Party in any way," she said.

Opposition Leader Matthew Guy said the video was "grossly inappropriate", particularly as it was for another political party, which the Liberal Party was preferencing last.

"We asked for her resignation within an hour of finding out and we got it," he said.

Matthew Guy confirmed the Liberal Party sought Ms Klein's resignation. ( ABC News )

Yan Yean, which covers several parts of Melbourne's northern fringe, including Whittlesea, Mernda, Doreen and Hurstbridge, is held by Labor's Danielle Green on a margin of 3.7 per cent.

The Australian Liberty Alliance is running candidate Siobhann Brown in the seat, as well as candidates in every Upper House race.

The party promises to stop the "Islamisation" of Australia, including by introducing a 10-year ban on visas for people coming from 57 Muslim-majority countries.

Former One Nation senator Fraser Anning delivered the keynote address at the party's state election campaign launch.

Senator Anning quit One Nation within hours of being sworn in and joined Katter's Australia Party, but was kicked out of that party last month after he proposed a ban on Muslim migrants.

Sorry, this video has expired Who can win the Victorian election?

Klein the latest of several candidates to pull out

Ms Klein is the second candidate the Liberal Party has lost during the campaign, after Upper House hopeful Neelam Rai.

Ms Rai pulled out after a newspaper revealed she had been the face of an unregistered charity, with the party saying she "failed to disclose a number of issues of relevance" on her preselection nomination form.

Labor has also lost two candidates.

Its original candidate for Melton, Justin Mammarella, withdrew citing family reasons.

Its candidate for Bayswater, Peter Lockwood, dropped out a day later, citing a health issue and the desire to spend time with his grandchildren.

Two weeks ago, Greens Upper House candidate Joanna Nilson quit after it emerged she posted tips on Facebook about how to shoplift, and made derogatory comments about Liberal senator Michaelia Cash.

The Greens have come under pressure in recent days to dump its candidate for the seat of Footscray, Angus McAlpine, over sexist and homophobic lyrics he rapped as a member of a hip hop crew.

Mr McAlpine this week apologised for the "reprehensible" lyrics, telling reporters he had written them as a "stupid and moronic" young man but had since changed.

The Greens candidate for Sandringham, Dominic Phillips, also apologised this week for "liking" as a teenager several Facebook pages that were racist or degrading to women.