The ex-deputy speaker resigned from the Victorian parliamentary party on Tuesday after Premier Daniel Andrews again demanded Mr Nardella repay the taxpayers' money.

His future in the wider ALP is also in doubt, with Mr Andrews telling the Lower House MP to speak with the state secretary about staying on.

"This morning I met with Don Nardella, the member for Melton, and I indicated to him, as I have done for some time now, that in my judgment he should repay the money he claimed," Mr Andrews told reporters.

"He indicated to me that he was unwilling to do that and I accordingly asked him to resign from the parliamentary Labor party and he has done that.

"It would have been far better if he'd repay the money."

Mr Nardella, who says he did nothing outside the rules, now sits on the cross bench.

Mr Nardella told reporters from The Age and Herald Sun to "f*** off" when approached for comment.

He and former Speaker Telmo Languiller quit their roles 10 days ago after claiming the second residence allowance - designed for regional MPs in electorates more than 80km from Melbourne - despite holding metropolitan seats.

They were replaced when parliament resumed on Tuesday.

Member for Bundoora Colin Brooks is now Speaker and Maree Edwards is the new deputy Speaker. As Bendigo West MP, she is entitled to claim a second residence allowance for maintaining a second home in Melbourne.

The audit committee will examine the claims made by Mr Nardella and Mr Languiller.

Mr Nardella claimed more than $100,000 after saying he lived in Ocean Grove since April 2014, about 100km from the CBD, even though his electorate of Melton is in Melbourne's northern suburbs.

Mr Languiller claimed more than $37,000 while living in Queenscliff instead of his western suburbs electorate of Tarneit for most of 2016, but he says he'll pay it back.

Mr Languiller was not in parliament because he was "not particularly well", Mr Andrews told reporters.

Liberal leader Matthew Guy says an audit committee does not go far enough, speculating Mr Nardella could have been claiming money for a spot at a caravan park.

Mr Guy's bid for a select committee to inquire into the matter was knocked back in parliament.

He is also calling for a police investigation and also asked the Ombudsman to examine the case.

"I want to know if there's been any matters of fraud committed in this whole affair, in this sleazy affair," Mr Guy told reporters on Tuesday.