Victorian Liberal MP Tim Smith, who was involved in a drink-driving accident last weekend, will not resign from parliament but is still considering his future after Liberal leader Matthew Guy asked him not to contest the next election.

The scandal threatens to undermine Mr Guy who had begun to make political inroads against Victorian Labor Premier Daniel Andrews, who faces a backlash over sweeping new pandemic powers and risks becoming engulfed in an anti-corruption inquiry into industrial-scale branch stacking by Labor.