West Australian police have failed in their bid to extradite former Peel Health Campus worker Ashton Foley from Victoria to Perth to face extortion charges.

Detectives from the Major Fraud Squad travelled to Melbourne to try extradite Ms Foley to face a count of demanding property with threats.

It is alleged she demanded money from the operator of the Campus, Peel Health Solutions, or she would release damaging documents to the media.

But Ms Foley, who appeared in a Victorian court under her real name Michelle Foley, was granted bail so she could care for her four children.

She is due to appear in court in Perth on March 1.

Ms Foley was also arrested in Victoria earlier this week on a separate matter of breaching a community-based order.

She was fined $1000.

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

Previous to that Ms Foley was employed as the 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 that campus.

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 said previously 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.

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