Criminal defence lawyer Ruth Parker led a 10-year battle to free Faruk Orman, who in July 2019 had his conviction for the murder of Victor Peirce quashed in the first successful Lawyer X appeal.
She condemned the decision to shut the office, which was established to bring criminal charges over the use of barrister Nicola Gobbo as a police source during Melbourne's gangland war.
The outcome reflected an astonishing lack of moral judgment, Ms Parker said on Tuesday.
"It also fails to take into account the corruption that occurred in our criminal justice system involving at least one criminal lawyer and a number of police (which) is, as far as I know, unprecedented in the Western world," the Galbally Parker principal lawyer told AAP.
"It is an atrocious example of corruption spanning years and to expend so much money and time investigating only to disband the OSI rather than consider prosecutorial power in its hands or appoint a special prosecutor independent of both the DPP and the OSI, is both cowardly and a sanctification of police corruption."
The office's disbanding means no one will be charged over the scandal despite $128.5 million having been spent on pursuing it.
Shadow attorney-general Michael O'Brien also criticised the decision on Tuesday, saying the government was giving a free pass to all those accused of perverting the course of justice.
Victoria's worst ever legal scandal would end with a whimper because the government did not want to give the OSI the power to authorise charges, he said.
Attorney-General Jaclyn Symes said the government was acting on the advice of special investigator and former High Court justice Geoffrey Nettle.
Mr Nettle last week said continuing his inquiry would be a waste of time because of constant rejections from Director of Public Prosecutions Kerri Judd.
Ms Judd defended the decision not to lay charges, saying her rejection of three evidence briefs was based on the reasonable prospect of a guilty verdict.
