Ben Carroll crowned Labor leader after caucus stoush

Shouting could be heard from inside the caucus room during the meeting that lasted almost two hours.

Attorney-General and Planning Minister Sonya Kilkenny signalled her intention to nominate for the vacant leadership but dropped her nomination, avoiding a weeks-long election process involving votes of Labor MPs and rank-and-file members.

Transport Infrastructure Minister Gabrielle Williams defeated Steve Dimopoulos in a ballot for the deputy leadership.

"Ben Carroll has been unanimously endorsed by the state parliamentary Labor party and as our next premier of Victoria," returning officer Juliana Addison told reporters.

"I'm also delighted to announce that Gabrielle Williams will be our deputy premier."

Mr Carroll, a former lawyer and political adviser from the party's smaller right faction, will be sworn in Victoria's 50th premier in a ceremony at Government House on Tuesday afternoon.

"Great result, great outcome," said Police Minister Anthony Carbines, one of the members of a cross-factional delegation who told Ms Allan on Monday she had lost majority support of the caucus.

Ms Allan initially flagged she would contest the leadership but reconsidered her position after speaking with colleagues overnight. 

"I was prepared to put my record and my plan to a ballot of members, as our rules allow," Ms Allan said.

"I believe I would have won but doing so this close to an election takes up valuable resources, including the most precious one: time."

Ms Allan, who described herself as a team player, said she was proud to have served as Victoria's second female premier and would have relished leading Labor into the November election.

"I was more than ready. I saw off two Liberal leaders. Now, I expect my successor will see off the third," she said.

She left the media conference without answering any questions, including whether she would remain remain in parliament after serving as the member for Bendigo East since 1999.

"Thank you and goodbye," Ms Allan said.

Mr Carroll, from the party's smaller right faction, was earlier swarmed by media as he arrived at parliament for the caucus meeting.

"I will have more to say later," he said.

Prime Minister Anthony Albanese paid tribute to Ms Allan, calling her a "very decent human being" who could be proud of her achievements in politics.

"This will have been a very difficult day. Politics can be a very tough business," he said in Western Australia.

"I'll work with whoever is the premier or chief minister in any state or territory."

There was no guarantee Mr Carroll could lead Labor to a record fourth-straight election victory, Redbridge pollster and former Liberal strategist Tony Barry said.

A significant cabinet reshuffle and policy overhaul would be needed to differentiate Mr Carroll's politics from Ms Allan's and subsequently remedy the drop in voter support for Labor incurred under her leadership, Mr Barry said.

"There's going to have to be changes around the Suburban Rail Loop and other things where he differentiates himself from Jacinta Allan," he said.

"Otherwise he's going to be completely open to the attack of same horse, different jockey.

"In that situation, he might make a bad situation even worse."

Ms Allan had faced mounting pressure in recent months following revelations of corruption on Big Build projects.

She refused to call a royal commission into the sector after corruption-busting lawyer Geoffrey Watson estimated it had cost the state $15 billion.

Persistent crime and a failure to reach a pay deal with public school teachers have also dogged the government.