Updated 1.40pm
Peter Dutton has told a press conference he believes he has the best chance of defeating Labor leader Bill Shorten in an election.
Mr Dutton declined to say if will contest the Liberal party leadership again, but committed to support the government from the backbench. Mr Dutton stood down from the Home Affairs portfolio this morning, after he lost a party room ballot to Malcolm Turnbull.
Mr Dutton began proceedings with an attempt to present a softer side, telling the cameras it was “nice to be here with a smile, talking about different matters to border protection”.
He listed his experience over 17 years in Parliament, with 14 years on the front bench including time in the health portfolio and said he bears no animosity towards the PM.
It is widely anticipated Mr Dutton will challenge again.
Updated 1.00pm
Malcolm Turnbull held a press conference. Mr Tunrbull says he does not hold a grudge against Peter Dutton for challenging him.
"Australians expect us to be focused on them… That is why it is very important that today the Liberal Party room has confirmed our leadership of the party,” Mr Turnbull said.
Ms Bishop said the leadership contest won by Malcolm Turnbull demonstrated his overwhelming support in the party.
Peter Dutton has called a press conference for 1.15pm
Updated 12.55pm
The Prime Minister’s Office says the PM has ruled out calling an early election
Updated 11.50am
Tony Abbott comments on reports Queensland LNP MP Warren Entsch was applauded for “getting stuck in” to the former PM
Updated 11.30am
Sky News is reporting that Malcolm Turnbull is considering calling an early election. It also reports that this morning’s Coalition meeting endorsed the PM’s energy policy reforms announced yesterday.
Updated 11:20am
Meanwhile Labor has reshuffled its shadow ministry.
Updated 11:15am
Updated 10.40am
Following the Liberals leadership ballot, Nationals and Liberal MPs are now locked a Coalition meeting to debate energy policy.
Yesterday morning, Malcolm Turnbull announced a backdown on his National Energy Guarantee policy.
He moved to fend off a potential challenge from Peter Dutton. We saw this morning he was ultimately unsuccessful.
Mr Turnbull scrapped plans for an emissions reduction target of 26 per cent on 2005 levels by 2030.
He said he would create new new powers for the government to take over operation of power generation assets, and impose default prices that limit what energy retailers can charge their customers.
Updated 10.25am
Don’t count Peter Dutton out after defeat in the ballot for leader of the Liberal party.
In June 1991 Paul Keating lost his first challenge to Bob Hawke for Labor leader 66 to 41. He won his second challenge by 56 to 51 in December that same year.
In 2012 Julia Gillard defeated Kevin Rudd’s first challenge 71 to 31. Mr Rudd won 57 to 45 at his second go, in June 2013.
Updated 10.10am
Peter Dutton’s supporters say the close result in the ballot for the Liberal party leadership will lead them to have another crack, the Australian Financial Review reports.
"It's over for him, give it two weeks," one key Dutton backer said.
Updated 10am
Gippsland MP and Veterans Affairs Minister Darren Chester has called for Malcolm Turnbull to serve his full term. As a Nationals member of the Coalition Mr Chester does not get a vote on the Liberal leadership.
Updated at 9.40am
Malcolm Turnbull’s challenger for leadership of the Liberal Party, Home Affairs Minister Peter Dutton, has resigned from Cabinet and moves to the backbench.
Mr Turnbull will have to reshuffle his ministry.
Updated at 9.34am
Malcolm Turnbull has defeated Peter Dutton 48 votes to 35 in the Liberal leadership spill this morning.
Earlier today
Malcolm Turnbull has declared the leadership of the Liberal party vacant, clearing the way for a vote on his leadership.
The Prime Minister entered the party room with his deputy Julie Bishop amid speculation about his leadership.
The likely challenger, Peter Dutton, attended a leadership meeting with Mr Turnbull earlier on Tuesday.
Despite Mr Turnbull's capitulation to energy policy rebels in his ranks, the expectation his leadership is under threat has grown.
Backers of Mr Dutton, the conservatives' standard-bearer, insist his support levels are building rapidly.
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But cabinet minister Christopher Pyne said earlier Mr Dutton had told him the Prime Minister has his absolute support.
"I'm certain he is telling the truth," he told the Nine Network.
Mr Pyne described his Liberal colleagues stoking leadership tensions as "cowards".
"I think the public would react very negatively to another change of leadership without them having a vote."
A report in The Australian suggests Mr Turnbull has lost confidence of nine Liberal cabinet ministers - half of the Liberal contingent - and Mr Dutton could move as early as Tuesday to challenge.
But the home affairs minister could instead wait until parliament resumes in September.
Mr Dutton's camp believes it could get to the 43 votes needed to oust Mr Turnbull, but the Prime Minister's backers says he still had majority partyroom support.
Fellow MPs from Mr Dutton's home state of Queensland are also understood to have been encouraged to turn on Mr Turnbull.
Small Business Minister Craig Laundy warns that would go down like a lead balloon.
"If we are fighting amongst ourselves, guess what, when the voters go to the election, they'll mark us down as they should," Mr Laundy said.
"They want us to know that we should be concentrating on the things that are important to them."
Liberal backbencher Tim Wilson acknowledged the numbers were being counted in the party room.
"I don't actually expect a challenge today, but we'll wait and see," he told the ABC on Tuesday.
Mr Turnbull told reporters earlier on Monday he had the confidence of Mr Dutton, the cabinet and the partyroom.
Adding to the prime minister's woes are a string of poor poll results.
The coalition has lagged Labor in 38 successive Newspolls, eight more than Tony Abbott's record. However, Mr Turnbull has consistently rated higher than Bill Shorten as preferred prime minister.
Labor frontbencher Anthony Albanese said the prime minister should call an election, if he survives the week.
"I think that would be a good thing for the nation, because something has to change, this is chaos in the parliament at the moment," Mr Albanese told Sky News.
- With Australian Associated Press