Embattled Victorian Labor MP Cesar Melhem has resigned as government whip as a result of allegations aired at an inquiry into trade unions.

Premier Daniel Andrews told the media the former union boss resigned from his upper house position on Monday night.

Mr Melhem was silent when he arrived at Parliament on Tuesday morning, responding to only one question.

• This state govt wants to ban plastic bags
• Queensland thieves pinch meteorite worth thousands
• The ‘archaic’ law forcing sex workers onto the streets

“Absolutely not” was his response when asked if he felt he had betrayed the members of his union.

The unions royal commission in Sydney has been told that during his time as AWU state secretary, Mr Melhem allegedly did a deal with a cleaning company to dud workers out of $2 million a year in penalty rates. Mr Melhem denied these allegations.

The former whip said his resignation was an attempt to prevent harm to the Victorian government, not an admission of guilt.

“I have made this decision as I believe that the continuing press speculation about my role in the government has the potential to distract the Andrews government from the important task it undertakes on behalf of the people of Victoria,” Mr Melhem said in a statement.

Victorian premier Mr Andrews has declined to comment on the allegations, other than to support his advisor John-Paul Blandthorn, whose evidence to the inquiry contradicted that of Mr Melhem.

“[Mr Blandthorn is] a valued member of my staff and he appeared after being requested by the royal commission to appear as a witness, a witness only.”

Jaclyn Symes has been named as the new whip in the upper house, defeating Philip Dalidakis in a caucus vote on Tuesday.

-with ABC, AAP.