Malcolm Turnbull has been elected as Australia's 29th Prime Minister, after launching an all-or-nothing leadership challenge on Monday afternoon in which he quit the front bench, declared Tony Abbott had failed as leader, and told colleagues that sticking with him would only make opposition leader Bill Shorten the next prime minister of Australia.

After his successful bid for the leadership of the Liberal Party was announced, Turnbull and Julie Bishop, who was re-elected as the party's deputy leader, took to the stage to host a late-night press conference.

Turnbull reserved special praise for New Zealand's Prime Minister John Key.

REUTERS/Daniel Munoz Malcolm Turnbull (left) has rolled Tony Abbott to become the Prime Minister of Australia.

"My firm belief is that to be a successful leader ... you have to be able to bring people with you by respecting their intelligence in the manner you explain things," Turnbull said.

"We've got some great leaders in Australia at state level but let me just point to one internationally, John Key, for example.

"John Key has been able to achieve very significant economic reforms in New Zealand by doing just that, by taking on and explaining complex issues and then making the case for them. And I, that is certainly something that I believe we should do and Julie and I are very keen to do that again."

Turnbull, who himself was rolled as leader by Abbott in 2009, paid tribute to Abbott and his achievements as Prime Minister.

"The nation owes a great debt to Tony Abbott and his family ... The achievements of the government that he has led have been formidable," he said.

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SKY NEWS Tony Abbott announcing a ballot for leadership of the Liberal Party on Monday afternoon.

Turnbull stated his commitment to the Liberal Party values.

"This will be a thoroughly Liberal government. It will be a thoroughly Liberal government committed to freedom, the individual and the market," he said.

"There has never been a more exciting time to be alive than today and there has never been a more exciting time to be an Australian. We will ensure that all Australians understand that their government recognises the opportunities of the future and is putting in place the policies and the plans to enable them to take advantage of it."



Bishop confirmed she would remain as Foreign Minister, and praised Turnbull's plans for the party.

"I'm confident that he has the passion, the energy and the vision to lead this country at this very challenging time," Bishop said.

"I thank Tony Abbott for his service as the leader of our party and particularly for the effort that he put in at the 2013 election when the Australian people knew they could not afford another moment under the Rudd-Gillard-Rudd government."

Turnbull said it was time for the government to go through a culture change.

"There are few things more important in any organisation than its culture. The culture of our leadership is going to be one that is thoroughly consultative, a traditional, thoroughly traditional cabinet government that ensures that we make decisions in a collaborative manner," he said.

"The Prime Minister of Australia is not a president. The Prime Minister is the first among equals."

ANOTHER PARTY ROOM COUP

The more moderate Turnbull emerged victorious from a tense late-night meeting of the Liberal party room and has been reunited in the leadership team with the deputy with whom he served as opposition leader until 2009, Julie Bishop.

Despite inflated claims of support by both sides as they sought to create momentum, the outcome in the end was decisive, with Turnbull winning 54 votes to 44.

Bishop beat Abbott-loyalist Kevin Andrews for the job of deputy by 70 votes to 30.

The result came at the end of an acrimonious day after Bishop confronted Abbott with the news he had lost the confidence of the majority of the party room and would face an imminent challenge from his communication minister, Turnbull.

The challenge came within hours.

The leadership change-over, which came just days before a hard-fought byelection will be decided in the Perth seat of Canning, was designed to reconfigure the government ahead of a general election due within a year, but has left it riven with divisions.

Among a slew of casualties from the meltdown of the Abbott operation were some of the federal government's most senior and prominent figures including Treasurer Joe Hockey, Senate leader Eric Abetz, and Defence Minister Kevin Andrews.

The end to Abbott's troubled 24-month stint as prime minister concluded a dramatic day in federal politics, which saw the more popular Turnbull resign as Communications Minister and launch a full frontal challenge for the top job.



Tony Abbott walks into the party room ahead of the vote on his leadership.

The decision immediately sparked bitter recriminations and plunged the Coalition government into a full-blown crisis threatening by implication to prematurely end the careers of several senior Liberals including Abbott, Hockey, Abetz, Andrews, and others.

In response a defiant Abbott attempted to wrong-foot his critics arranging a snap evening party room meeting in which he declared he would be a candidate and would survive.

He said he had been "heartened" by the support flooding in to Liberal MPs' offices, as he called on colleagues not to succumb to the Labor disease.

"We are not the Labor Party," he said, stressing that the party, the government and the country were "better than that".

The showdown came to a head after a brace of senior ministers were understood to have shifted away from Abbott, led crucially by Bishop.



Abbott was informed shortly before question time on Monday that his leadership would be challenged.

Promising a more consultative style devoid of Abbott's slogans and captain's picks, Turnbull's decision was announced via a live press statement at 4pm.

It came after key ministers, marginal seat MPs, and even some in relatively safe safe seats around the country, previously loyal to Abbott, had decided they were heading for defeat under his leadership.

Turnbull advised the Prime Minister he no longer enjoyed his confidence at a 3.30pm meeting in which he advised he intended to contest the leadership, and requested that the position be declared vacant to facilitate a ballot.

"This is not a decision that anyone could take lightly," Turnbull said.

"I have consulted with many, many colleagues, many Australians, many of our supporters in every walk of life. This course of action has been urged on me by many people over a long period of time."

In a critical precursor to that discussion, Bishop had called on Abbott prior to question time. According to the Turnbull camp, Bishop had asked him to stand down. However, versions differ on that meeting with the Abbott camp advising the meeting had been sought to advise Abbott that Turnbull was about to move and would likely have the numbers to succeed.

The high-risk showdown came five days before the crucial Canning byelection, catching many observers and pro-Abbott MPs off-guard.

It was announced within hours of a Fairfax-Ipsos poll revealing Canning voters are lining up to hammer the government in a massive 10 per cent swing against them, making the seat ultra-marginal.



Malcolm Turnbull departs after addressing the media and announcing that he is challenging Prime Minister Tony Abbott for the leadership.

As both deputy Liberal leader and the government's most senior minister on the ground in Canning, Bishop's intervention was crucial. It is understood she told Abbott his government had utterly failed to communicate its key economic message to voters and was heading for electoral defeat at the general election whenever it was held.

Explaining his move, Turnbull unloaded on Abbott, declaring the government was drifting without economic leadership, and had offered slogans rather than explanations for policy.

In a statement aimed as much at party room doubters as the public, Turnbull said the government had not been successful in "providing the economic leadership that we need".

"It is not the fault of individual ministers," he said.



Julie Bishop told Abbott earlier on Monday that she no longer had confidence in him.

"Ultimately, the Prime Minister has not been capable of providing the economic leadership our nation needs. He has not been capable of providing the economic confidence that business needs.

"We need a different style of leadership. We need a style of leadership that explains those challenges and opportunities, explains the challenges and how to seize the opportunities. A style of leadership that respects the people's intelligence, that explains these complex issues and then sets out the course of action we believe we should take and makes a case for it. We need advocacy, not slogans."

Calling for a new style of governing in which the intelligence of voters is respected, he said it was not clear that could occur under Abbott.

"He will cease to be Prime Minister and he'll be succeeded by Shorten."

As relations within the government turned toxic, Hockey hit back publicly at Turnbull, declaring his statements about economic policy were "wrong" and claiming Turnbull had never questioned the economic direction and had never raised objections in cabinet.

In a strategic move designed to placate right-wing Liberals worried about his social progressivism, Turnbull has assured Liberals he will not seek to introduce an emissions trading scheme, will not seek to increase Australia's emissions reduction targets, and will not seek to overturn the recent party room decision to put same-sex marriage reform to a plebiscite.

Turnbull gave no hint of favouring an early election if elected, but the new dynamic has made the timing of that impossible to predict.