The High Court has rejected an Andrews government bid to thwart an investigation into its alleged misuse of taxpayer-funded resources for political campaigning at the 2014 election.
The embarrassing blow for the government means Ombudsman Deborah Glass is free to continue investigating allegations that Labor used electoral officers for campaigning in contravention of parliamentary rules.
The legal setback comes as Victoria Police confirmed to the state opposition that its request for an investigation into the conduct of former speaker Telmo Languiller had been allocated to an investigator for assessment.
Mr Languiller was forced to resign as Speaker after it emerged he claimed $37,800 from a lucrative second residence allowance for a Queenscliff home away from his outer suburban electorate.
He has repaid the money after admitting claiming the allowance fell outside community expectations.
The allegations Labor misused electoral officers were referred to the Ombudsman by the upper house of the Victorian Parliament, where the Coalition and Greens used their numbers to spark the investigation.
Last year Ms Glass sought a ruling from the Supreme Court about whether she had jurisdiction to investigate the matter. The Supreme Court subsequently gave her the green light to proceed but the Andrews government has launched several legal challenges to prevent the investigation.
Shadow attorney-general John Pesutto said the courts had now thrown out the government's fourth attempt to "cover up the ugly truth" about the allegations.
"This has been a scandalous waste of taxpayer dollars defending the Labor Party when there was never any basis for doing so," he said. "If the Andrews government has nothing to fear, it should have nothing to hide."
Greens MP Sam Hibbins also condemned the government for trying to block the investigation.
"The stench hanging over Spring Street will remain until the rorts for votes and second home allowance scandals are resolved," he said.
A spokeswoman for the government said it had taken the legal action to "protect the architecture" of Victoria's integrity regime regarding the relationship between the Parliament and Ombudsman.
She said the relevant MPs would continue assisting Ms Glass in her inquiries. She said the government had assisted with previous inquiries by the Parliament and Victoria Police "both of which have been concluded".
Ms Glass released a brief statement confirming she would continue her investigation.
The issue leapt into the spotlight after claims emerged that electoral officers funded by the Parliament were instead used by Labor to campaign during its successful 2014 election bid.