Malcolm Turnbull has won the Liberal Party leadership challenge against rival Peter Dutton. The vote was 48 to 35.
The Guardian reported Mr Turnbull called the challenge on Tuesday "to force his dissenters out" - and Mr Dutton accepted.
However Australian media reports the result will leave Mr Turnbull weakened.
- Malcolm Turnbull 'deflated and defeated'
- Australia's Liberals could dump Malcolm Turnbull for Peter Dutton
"Turnbull, and everyone in the government, now knows there are 35 people who longer support his leadership of the Liberal party," writes reporter Katharine Murphy.
"And the voters of Australia know their government is in the grip of a poisonous civil war."
Mr Dutton has now resigned his position as Home Affairs Minister, and will go back to the back bench.
However this could make him an even more dangerous opponent, as he is now no longer bound by cabinet and is free to say what he wants.
Mr Turnbull's position as leader of the Liberal Party came under threat after a sharp drop in popularity for the Liberal-National coalition and internal conflict over the controversial National Energy Guarantee policy.
The infighting damaged the Liberals' poll ratings. The Coalition Government now trails the main Labor opposition by 45 percent to 55 percent, according to the latest Fairfax-Ipsos poll.
This 10 percentage point gap has widened from just 2 points a month ago.
Home Affairs Minister Peter Dutton put up his hand to challenge after publically supporting his leader.
"In relation to media stories today, just to make it very clear, the Prime Minister has my support and I support the policies of the Government," he said on Twitter on Saturday morning.
Newshub.
