The managing director of Melbourne Water, Shaun Cox, has resigned suddenly following differences with the corporation's board over a restructure currently under way.


The departure follows a rocky period for Melbourne Water, with Mr Cox at the helm when the state-owned company was forced to repay customers $266 million because of overcharging for the costs of the Wonthaggi desalination plant.


It is understood the decision was taken on Thursday afternoon. Melbourne Water says it was a mutual decision for Mr Cox to leave.


In a statement, Melbourne Water chairman Paul Clark said Mr Cox's experience and expertise would be missed.


"Shaun has helped steer the organisation from an era of investment in large-scale infrastructure to a greater focus on our customers," he said.


"Shaun's legacy will be seen in the coming years as Melbourne Water rolls out programs and initiatives efficiently to ensure customers are at the heart of everything we do."


Opposition water spokesman Martin Foley said the resignation came amid a backdrop of behind-the-scenes tensions between state water corporations and the Napthine government's Office of Living Victoria – set up to encourage greater use of water recycling and stormwater runoff – about competing water strategies.


A spokeswoman for Water Minister Peter Walsh said Melbourne Water was making some interchanges to its structure and it was mutually agreed by the board and Mr Cox ''that a change in direction was required.''


''An exit arrangement was negotiated between the two parties. It is the responsibility of [water] boards to manage the arrangements of senior executives, within the parameters of public sector employment guidelines,' a spokeswoman said.


''The Minister for Water has full confidence in the Chair and board of Melbourne Water.''


A spokeswoman for Water Minister Peter Walsh said Melbourne Water is

making some interchanges to its structure and it was mutually agreed

by the board and Mr Cox ''that a change in direction was required.''

''An exit arrangement was negotiated between the two parties. It is

the responsibility of [water] boards to manage the arrangements of

senior executives, within the parameters of public sector employment

guidelines,' a spokeswoman said.

''The Minister for Water has full confidence in the Chair and board of

Melbourne Water.''