Western Australian police have confirmed they have applied to extradite former Peel Health Campus worker Ashton Foley to Perth to face extortion charges.

Ms Foley was arrested in Victoria on Tuesday and has appeared in court on charges of breaching a community-based order placed on her in that State in 2011 for dishonesty offences.

She resigned as CEO of the Orbost Hospital in Victoria last month, after it emerged she was wanted on deception charges in the United States.

Ms Foley was employed as chief operating officer at Peel Health Campus on a salary of $250,000.

The 40 year-old had been considered the key witness into an inquiry investigating fraud and corruption at the Peel Health Campus, where she was employed as chief operating officer.

WA police allege she demanded money from the health campus that she was not entitled to, under the threat of releasing documents to the media.

The Premier Colin Barnett has previously said an inquiry into the Peel Health Campus would still go ahead despite fraud allegations facing its main witness.

Ms Foley gave damning evidence against the hospital's management to a parliamentary committee last year.

Mr Barnett says it is up to Professor Bryant Stokes, who is leading the inquiry, to decide whether to take evidence from Ms Foley.

The Premier says he believes Ms Foley has been discredited as a witness.

"I for one would be sceptical but that will be up to Professor Bryant Stokes to decide whether she is a credible person to give evidence," he said.

Ms Foley is due to appear in the Perth Magistrates Court on Monday.