Senior Lib resigns as MPs thrash out legal cost plan

Diego Fedele/AAP PHOTOS

The Victorian Liberals have lost a senior shadow cabinet member as Opposition Leader John Pesutto prepares to advance a plan to cover the costs of looming legal action.

Liberal upper house deputy leader Matt Bach stepped down from his role and as a member of the shadow cabinet in a special party room meeting on Thursday night.

The opposition education spokesman has accepted a role in the UK as an assistant headmaster and teacher and intends to leave parliament at the end of the year or early next year.

"We'll win the next election but nonetheless, for me and my family, we felt that we had a great opportunity," Mr Bach told reporters at state parliament.

He will be replaced as the party's upper house deputy leader by first-term upper house MP Evan Mulholland, who was the only nominee for the role.

"Things move quickly in politics," he said.

Liberal MPs also met to discuss how Mr Pesutto and his senior leadership team would finance their legal bills following a new defamation threat.

UK anti-trans rights activist Kellie-Jay Keen this week issued defamation concerns notices to Mr Pesutto, deputy leader David Southwick, upper house leader Georgie Crozier and deputy upper house leader Matt Bach.

The notices are the first step in the potential launch of defamation proceedings.

Mr Pesutto said the party room agreed to look at a way for Liberal organisers to financially cover him and the leadership team.

"What we're doing is we're asking the party to take some actions to look at how it can extend indemnities and provide cover," he said.

"Anybody working in a workplace today will ordinarily have insurance cover in the course of their employment."

Mr Pesutto will put the proposal to the party's administrative committee, which was also due to meet on Thursday evening.

Ms Keen, who also goes by the pseudonym Posie Parker, headlined a Melbourne anti-trans rights rally in March that was gatecrashed by a group of masked men who performed Nazi salutes.

Her notice claims the entire Liberal leadership team defamed her by alleging she was "publicly associated with far right-wing extremist groups including neo-Nazi activists", which she denies.

She gave the four leaders 28 days to apologise and pay compensation for making "grossly misconceived, wilfully vexatious and wretchedly false" claims, or face court action.

Ms Keen said she did not want rank-and-file Liberal members to foot the legal bills.

"In taking the decision to issue a concerns notice, it was not at all my intention to see the rank-and-file membership of the Liberal Party meet the costs of the Victorian parliamentary leadership," she said in a statement.

"In my view, the price of leadership is responsibility."

Mr Pesutto said he was surprised to hear of Ms Keen's concerns.

"I didn't know Posie Parker was a Liberal Party member," he said

Ms Keen was joined at the anti-trans rights rally by Victorian MP Moira Deeming, whose involvement led to her suspension and later expulsion from the parliamentary Liberal Party.

Ms Deeming has since issued a string of defamation concerns notices to Mr Pesutto, who moved the initial motion to expel her.

On Thursday, the former Liberal MP said she had always been open to mediating the matter with Mr Pesutto.