VICTORIAN Water Minister Peter Walsh has backed down on his promise of a judicial inquiry into the $2b Northern Victorian Irrigation Project.

Mr Walsh has instead written to the Ombudsman asking him to consider investigating the former Labor Government and its agencies handling of the Northern Victoria Irrigation Renewal Project.

Opposition Water spokesman John Lenders said there was a huge difference between an open and transparent judicial inquiry and a ``behind-closed-doors'' ombudsman's investigation.

"An ombudsman's probe is very secretive,'' Mr Lenders said. ``It's another example of the Coalition's broken promises.''

Mr Walsh's backdown sits in contrast to his pre-election demands upon the former Labor Government for a full-scale judicial inquiry into NVIRP to ensure the government-funded project was being properly managed.

In June last year Mr Walsh issued a press release stating: ``an inquiry with the full suite of judicial powers was the only way Victorians could be sure of the probity of the use of public funds''.

But at a Rural Press Club of Victoria breakfast this morning Mr Walsh said the ombudsman had the same powers as a royal commissioner (judicial powers).

However he admitted the investigation would be held behind closed doors.

"The Ombudsman has stated that he will investigate the matter,'' Mr Walsh said.

"He will set his own terms of reference for the inquiry and I am confident that, with powers similar to a Royal Commission, he will give advice as to how the Coalition can best deliver the remainder of these projects.''

Mr Walsh said the Ombudsman would focus on the effectiveness of the NVIRP project's management, oversight and governance and the rigour of the methodology for estimating, verifying and allocating water savings.

He said delivery of the project would continue while the Ombudsman conducted his inquiry.