Vic government shuts down OLV

Victorian Labor has abolished the troubled Office of Living Victoria.

Water Minister Lisa Neville says the shutdown will take effect immediately.

She also said the state government would launch an independent review of the entire office, with emphasis on grants awarded through the Living Victoria Fund.

"OLV has been a waste of millions of dollars and the Andrews Labor government is putting a stop to it," Ms Neville said in a statement.

"The public deserve to have confidence that taxpayers' money for water programs is being properly spent and not wasted on projects with no benefit to our water system."

The OLV was set up in 2012 by former water minister Peter Walsh, who is now the leader of the Victorian Nationals.

An Ombudsman's report released in August found the authority failed to comply with government policies and conflicts of interest were poorly handled.

Ms Neville said the shutdown fulfilled one of Premier Daniel Andrews' election promises.

"We will investigate the entire OLV operation, making sure all of the deals and poor practices set up by Mr Walsh and the coalition are brought to light."