Prime Minister Malcolm Turnbull has emerged victorious in a sudden Liberal leadership ballot, seeing off Peter Dutton in a 48-35 split of Liberal party members.
Mr Dutton has now resigned his powerful position as Home Affairs minister and will move to the backbench, in keeping with the tradition of cabinet solidarity.
The move will prompt a cabinet reshuffle, with the crucial portfolio in charge of Immigration, the federal police and Australia's lead intelligence agencies now up for grabs.
Australian Prime Minister Malcolm Turnbull (right) and Australian Foreign Minister Julie Bishop arrive for a party room meeting
The government's chief whip Nola Marino confirmed the results of the leadership ballot in a courtyard at Parliament House on Tuesday morning.
The relatively narrow victory may not spell the end of Mr Dutton's leadership ambitions. Julia Gillard won her first ballot against Kevin Rudd 71 - 31 but went on to lose in a second ballot.
