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The Baillieu Government's woes have deepened, with the shock resignation of controversial Liberal MP Geoff Shaw.

The leader of the Liberal Party in the upper house, David Davis, said Mr Shaw had quit.

"Mr Shaw, the Member for Frankston, has resigned from the parliamentary Liberal Party," Mr Davis told parliament.

Seven News understands Shaw will run as an independent MP in the lower house.

His resignation could cost the coalition government its one-seat majority.

In that case it would be forced to form a minority government or call an election.

Mr Davis said he was unaware whether Mr Shaw had guaranteed to continue to support the government on matters of supply and confidence.

"The government is very much determined to press on," Mr Davis said.

"The government is very much determined to deliver for the people of Victoria."

Mr Shaw has been under fire for misusing his taxpayer-funded car to help run his hardware business.

The shock resignation comes as Premier Ted Baillieu continues to deal with the fallout from the secret police tape scandal that has rocked the state government.

Liberal MPs are currently meeting at Spring Street in the wake of the news.

More to come.

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