Paul Dale previously worked with the drug squad and on Monday told a royal commission into the use of police informants he had been "set up" by Nicola Gobbo, also known as "Lawyer X', who was legally representing him.

"I now know I was set up, she was a police informer," Mr Dale said from the witness stand.

A phone conversation between the pair in December 2008 was "absolutely" a privileged conversation, the contents of which she passed on to her police handlers, he added.

"As a result of that conversation I was charged with murder and spent eight months in solitary confinement on remand, based on that conversation," Mr Dale said.

"Now we see the whole can of worms opened up about what she did with her clients, against all her clients."

The former detective was charged with the murder of police informer Terrence Hodson and his wife Christine who were killed, execution-style, in 2004.

Mr Hodson had been supplying information to the force about Mr Dale in relation to alleged drug squad corruption.

Gangland criminal Carl Williams also implicated the detective in the Hodson murders but the allegations were dropped after his prison bashing death in 2010.

Mr Dale said on one occasion at the casino, Ms Gobbo phoned Williams and had the drug kingpin speak with him.

"I was being set up, to make it look like I had an unethical, unlawful relationship with Carl Williams," Mr Dale said.

"That was used against me."

Mr Dale returned from overseas this week to give evidence at the commission and said he was "excited" to take part.

"(It's) an opportunity for Victorian citizens to finally see the corruption within the higher ranks of the Victoria Police," he said of the commission.

The public hearings have previously been told of Ms Gobbo's intimate relationships with police officers.

Mr Dale said he slept with Ms Gobbo once on a "drunken night".

Commissioner Margaret McMurdo is due to hand down an interim report on July 1.

The hearing continues.

Australian Associated Press