Mr Lay had become Victoria's 21st chief commissioner in November 2011.

He announced his decision to step down flanked by Premier Daniel Andrews on Monday morning.

He said the catalyst for his decision had been his wife's illness.

Mr Lay said over the past three years the force had been bolstered by 2700 police and PSOs, marking a 20 per cent growth and faced down organised crime, including the threat of outlaw motorcycle gangs.

But he said he was most proud of the shift in the way police thought about family violence in recent years.

His resignation becomes formal on January 31.

Mr Andrews said Mr Lay was leaving Victoria a safer place and leaving behind a stronger police force.

"This is the best police force in our nation and that's not by accident its because of leadership over many years," Mr Andrews said.

"Victoria could not have hoped for a better chief commissioner of police than you Ken.

"Ken Lay leaves Victoria Police in a much stronger position than he found it."

Mr Andrews said Mr Lay would be remembered for his leadership in tackling family violence.

- With Benjamin Preiss and Tammy Mills

More to come