Ms Nixon told a press conference that she will not renew her contract when it expires in April.

Ms Nixon was sworn in as chief commissioner in April 2001 and was the first woman to be in charge of an Australian police force.

Deputy commissioner Simon Overland is tipped to replace Ms Nixon next year.

Ms Nixon said she was sad, but excited to be moving on.

She told the Victorian government of her decision last Friday.

''Despite the offers from the government to continue, I believe it's time now that I hand over after nearly eight years as chief commissioner of Victoria and 36 years as a police officer,'' she said.

''I thank the premier (John Brumby) and the (Police) Minister (Bob Cameron) for their offer and their support and I believe that I'm leaving Victoria Police in good order.''

Ms Nixon said she was considering a range of options for her future.

Premier John Brumby thanked Ms Nixon for her work during the past seven years.

"Morale has improved significantly and attrition has halved from seven per cent of the workforce in 2000-01,'' he said.

''Crime in Victoria has fallen every year that Ms Nixon has been our chief commissioner and the overall crime rate has fallen by 24.5 per cent since 2000-01.''