Trial of Victorian Labor MP Melhem dropped

The trial of Victorian Labor upper house MP Cesar Melhem and the Australian Workers Union with the federal government's union watchdog has been dropped.

The Registered Organisations Commission had started civil proceedings in the Federal Court against the AWU and its former Victorian branch secretary Mr Melhem over an alleged scheme to artificially inflate union membership between 2008 and 2013.

But the trial listed to start on Wednesday was dropped on Tuesday after Mr Melhem made admissions for failing to exercise his powers properly and the AWU admitted to not keeping a proper register of members.

The court will now list a hearing to determine the appropriate penalty.