Bismuth vanadate Bi4V2O11−y doped with Fe was studied by neutron diffraction. It was shown that Fe substitutes V only partially and the redundant iron forms an impurity hematite phase. In the sample with nominal content Bi4(V0.96Fe0.04)2O11−y a new phase transition within the frame of the monoclinic structure with the appearing of inversion center was discovered in the temperature region 200–300 °C. This transition was also confirmed by DTA experiments. Slow stabilization of the crystal structure with stabilization times of the order of hours, accompanied by a decrease of the unit cell volume, was observed. At high level of Fe doping, in addition to the dominant tetragonal γ-phase some amount of the nanosized monoclinic α-phase was detected.