Consumer Affairs Minister Marlene Kairouz is the third minister to leave cabinet over the branch-stacking scandal engulfing Victorian Labor.
Ms Kairouz follows factional allies Adem Somyurek and Robin Scott who left the ministry on Monday.
Mr Somyurek was booted as local government minister and lost his membership to the Labor Party over the stacking allegations and recordings capturing him using vile language against colleagues and staff.
Ms Kairouz announced on Tuesday, before parliament resumed, that she was standing down so as not to be a "distraction".
"I look forward to the opportunity to clear my name and am confident any investigative process will do so," she said in a statement.
"I note that these matters do not relate to any allegations of criminality or corruption."
She will continue to serve her electorate of Korotoit.
Moments earlier, senior government ministers had started calling for Ms Kairouz to reflect on her position.
Premier Daniel Andrews and Consumer Affairs Minister Marlene Kairouz in 2018. Source: AAP
The Age published more recordings on Tuesday involving Mr Somyurek and Ms Kairouz, which appear to encourage staff to take part in the branch stacking.
On the suggestion of an official going through membership forms, Ms Kairouz reportedly said: "I said to (my chief of staff) Michael (De Bruyn), let him do it because he's got 2500 of our members that he has to go through. They drop one, we put in 10 ... Always call his bluff."
Police Minister Lisa Neville said Ms Kairouz should reflect on a commitment she made to Premier Daniel Andrews on Monday that she had acted appropriately at all times.
"I think she really does need to reflect on that and answer to the premier," Ms Neville said.
"She's part of an IBAC and police investigation which is...important. I think this is now a matter between her and the premier to get the best outcome."
Ms Neville said anyone involved in branch-stacking had "lost focus" on the party's mission to support, defend and protect Victorians.
Treasurer Tim Pallas also said Ms Kairouz needed to reflect.
"The minister will probably need to reflect upon the revelations in today's media and I'm sure the premier will no doubt do so as well," he said.
Opposition Leader Michael O'Brien said Ms Kairouz' position was "absolutely untenable", adding the premier should take responsibility for the issues unfolding under his decade-long Labor leadership.
"He's set the standard. He's responsible for this corruption."
Allegations first aired by The Age and 60 Minutes on Sunday allege former Labor heavyweight and powerbroker Mr Somyurek handed over cash and used parliamentary employees to create fake branch members and amass political influence.
Mr Somyurek denies the allegations and wants police to investigate the recordings used in the expose.
It is alleged staff members of Ms Kairouz and Mr Scott were involved in Mr Somyurek's efforts.
In his resignation as assistant treasurer and veterans minister, Mr Scott also vowed to clear his name.
There are reports former Victorian premier Steve Bracks and former federal MP Jenny Macklin will head a review into the scandal.
