A new inquest will be held into the death in custody of Palm Island man Mulrunji Doomadgee.

Mr Doomadgee died in the north Queensland island's police watch-house shortly after he was arrested for drunkenness last November.

He had four broken ribs and a ruptured liver and spleen.

State coroner Michael Barnes this morning stepped down from the inquest amid perceptions of possible bias.

He told the Townsville hearing that it was important for all parties to have confidence in the process.

The deputy state coroner Christine Clements has taken over.

She has ordered a directions hearing for the new inquest to be held in Brisbane later this month.

The three-day hearing will determine the legal boundaries and where and when the new inquest will be held.

The inquest into his death was thrown into turmoil on Tuesday when Mr Doomadgee's family's lawyer asked the coroner to stand down from the inquest, citing his involvement with prior complaints relating to Senior Sergeant Chris Hurley who had arrested Mr Doomadgee.

Lawyers for the officer and the police service also called for the coroner to step aside after he was seen talking and drinking beer with the lawyer acting for the Palm Island Council.

Meanwhile, the Queensland Police Union says Mr Barnes is no longer fit to hold his position and should quit.

Union president Gary Wilkinson says Mr Barnes has been incompetent in his handling of the Doomadgee inquest.

Mr Wilkinson says if the coroner does not step down, the State Government should ensure he goes.

"The man ought to have the decency to make the decision himself. Failing that of course it's then a matter for the Government but I don't expect anything will happen," he said.

"I mean everybody likes to cover these things up but in our view the man is not fit to hold the position."