A FORMER Victoria Police detective, Paul Noel Dale, has been charged with the murder of Terence Hodson, who was a corruption witness when he was shot dead along with his wife, Christine, in May 2004.

The former drug squad officer's arrest yesterday comes after a jailed underworld figure agreed to testify against Dale.

The witness' identity is suppressed, but it is believed he has told police about his relationship with Dale and the former detective's alleged role in commissioning the contract killing of Hodson.

Dale, 39, yesterday represented himself during a brief hearing at the Wangaratta Magistrates Court. "This is going to turn my life upside down. I am anxious to get these matters before the courts to clear my name," he said.

In late 2003, Hodson, Dale and detective David Miechel were charged over an attempt to steal $1.3 million in drugs from an East Oakleigh house.

After Hodson agreed to testify against the police, files identifying him as an informer were leaked to the underworld. Within weeks, Hodson and his wife were killed and the case against Dale collapsed.

Miechel was later sentenced to 12 years' jail.

Force command denied any link between corruption and the gangland killings after the Hodsons' death, despite holding information about Dale's underworld links and his suspected role in leaking the Hodson files.

The murders sparked calls for a royal commission and led to the creation of a new police watchdog, the Office of Police Integrity, which held two inquiries into issues related to the murders.

Deputy Commissioner Simon Overland said yesterday the reliability of the police witness "was obviously an issue" and that he expected evidence to be vigorously contested.

"We have obviously taken advice from the DPP (Director of Public Prosecutions) in relation to that and we have now got to the point where we believe we have sufficient evidence to charge," he said.

He also defended police handling of the case. "We didn't deny police involvement (at the outset), we just didn't leap to the conclusion that everyone else leapt to."

Police are investigating the hitman suspected of killing the Hodsons.

He is in jail facing unrelated murder charges.

Dale was remanded into custody and will appear before the Melbourne Magistrates Court in June.