Families of children murdered by criminals on parole can't receive government compensation so neither should the teenage daughter of underworld figure Carl Williams, a victims group says.
Dhakota Williams, 14, has received a reported six-figure sum in a confidential settlement with the Victorian government.
She was nine when her father was beaten to death by Matthew Johnson with part of an exercise bike in their shared cell at the maximum-security Barwon Prison near Geelong in April 2010.
The Victims of Crime Assistance League thinks the payout to her is inappropriate.
"We've got families in our group whose children were murdered by criminals on parole and they can't apply for this sort of thing," VOCAL secretary Jenny Newman told AAP.
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"In many cases genuine victims of crime don't receive payments or have to wait for years to achieve minimal payments."
Premier Daniel Andrews says he is not particularly pleased with the outcome.
But settling the case out of court, without admitting liability, saved "potentially millions" that might have had to be paid to the Williams family if their claims had been successful at trial.
The payout won't extend to Dhakota's mother Roberta or grandfather George Williams who were both claiming significant sums.
Dhakota's compensation, which will be held in trust until she is 18, is also significantly less than she sought, he said.
"When you're told by the independent advisers and the government's lawyers that this is the best deal you can practically hope to get you've got to take that advice," the premier told reporters on Wednesday.
"I'm not particularly pleased about this, I don't think anyone is."
The government has legislation before parliament seeking to force courts to consider a family's criminal activities when determining compensation payouts.
"Judges will be in a position where they can reduce very heavily, by 90 per cent, any awards they might make to a particular person if there's a sense they have been involved in criminal activity or if they have been the beneficiary of proceeds of crime," Mr Andrews said.
A Victorian Ombudsman's investigation found the murder, motivated by Williams turning police informer, was a failure in the prison's duty of care to ensure his safety.
