Tony Abbott has vowed to buckle down and take the Liberals to the next election, as he used a speech to ditch controversial policies and sound a warning to disgruntled MPs.
The coalition has had a rocky three months, losing government in Victoria and Queensland and lagging well behind Labor in national opinion polls, with the prime minister blamed for much of the malaise.
Mr Abbott told the National Press Club in Canberra on Monday he had dumped his $22 billion paid parental leave scheme.
He has also handed over responsibility for awarding knighthoods to an independent awards council, following the public backlash over Prince Philip's Australia Day honour.
"Sure, we've had a bad patch, but what do you do when you have a bad patch?" Mr Abbott said.
"You can buckle down to business or not, but failing to buckle down to business always makes a bad situation worse."
Mr Abbott confirmed that on Sunday night he had spoken with Foreign Minister Julie Bishop, who is the frontrunner for the leadership should a vote proceed.
"She's been a terrific deputy, a terrific minister. I believe I have her full support and I certainly look forward to continuing to have that."
Ms Bishop, who will be involved in a two-day cabinet and outer ministry meeting this week to set the agenda for 2015, told reporters she supported Mr Abbott.
Mr Abbott said he also had the confidence of his party room, which meets next week when parliament returns.
In a message directed to wavering MPs, he said any leadership change should be in the hands of voters.
"It's the people that hire and frankly it's the people that should fire," he said.
Treasurer Joe Hockey, who sat at Mr Abbott's table for the speech and would lose his job in the event of a leadership change, called on Liberal MPs to stop focusing on themselves.
"Any talk other than jobs, families and small business is a complete waste of time," Mr Hockey said.
Another potential leadership contender, Malcolm Turnbull, brushed off questions, saying he would be concentrating on the prime minister's speech.
Nationals leader Warren Truss said dropping the paid parental leave scheme and replacing it with a revamped childcare and family benefits system was the right call.
"It was expensive and ... and we've got difficult economic circumstances, so some things that might in themselves be good are not affordable at this time."
Mr Abbott declined to go into detail as to how the new families package would work, but flagged it would involve merging the various types of payments, keeping costs down and putting more money into the pockets of parents.
The prime minister also revealed a new small business jobs package, including a tax cut of at least 1.5 per cent, would be released in coming months.
Coalition MPs have been promised greater access to ministers and a bigger say in policy decisions.
Labor leader Bill Shorten said Mr Abbott had still failed to concede the "unfair" budget, including the Medicare co-payment and university deregulation, was the government's key problem.
"We heard a desperate speech from a politically drowning man aimed at pleasing his MPs but nothing for Australian families," he said.
Independent senator Nick Xenophon said Mr Abbott remained in "dire straits" with his backbench.
"It's a case of too little too late," he said.
Social Services Minister Scott Morrison, who's also been touted as a possible leadership candidate, said there was no way he would challenge Mr Abbott.
"The prime minister has my support and I've outlined that in any number of ways," he told ABC television.
Asked whether Mr Abbott's assertion the Australian people hired and fired leaders would put the party room offside, Mr Morrison said there was "something very special about a Leader of the Opposition who has been elected into the position of prime minister" and MPs should take that seriously.
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