NSW Premier Gladys Berejiklian has told Multiculturalism Minister Ray Williams he faces the axe if he continues to push a spill motion against Liberal frontbench colleague Dominic Perrottet.
Her warning comes after her deputy Mr Perrottet, member for Hawkesbury, announced his intention to challenge colleague Mr Williams for his old seat in neighbouring Castle Hill.
The spat has threatened the stability of the government, with Mr Williams calling on the Treasurer to step down as deputy leader of the party or face a spill motion on Tuesday.
Ms Berejiklian revealed on Friday she reminded both cabinet members the government was expected "to be solely focused on delivering for the community", although she added that her deputy Mr Perrottet has her full backing.
She also demanded Mr Williams refrain from proceeding with the spill motion, "otherwise, his position in cabinet is untenable".
Mr Perrottet says his reason to contest pre-selection in Mr Williams' seat was to balance work and family commitments while giving the people of Hawkesbury the representation they deserve.
"This is not a decision I have taken lightly and comes after a great deal of reflection and discussions with my family and colleagues," he said in a statement.
Mr Williams, however, is refusing to budge. In a statement, he said: "My community is everything to me and I will be contesting the seat of Castle Hill at the next election and will continue to work hard on behalf of my local community.
"Given Dominic is challenging myself as both a fellow member of parliament and a ministerial colleague I believe it is untenable for him to remain as the deputy leader."
Opposition Leader Luke Foley said the situation showed the Liberals had learned nothing from the backlash that followed the toppling of former prime minister Malcolm Turnbull.
"The public are sick and tired of politicians focusing on themselves," he told reporters in Sydney.
"The Liberal Party civil war has moved from the federal parliament to the NSW parliament and good government has been totally ignored."
Prime Minister Scott Morrison, a former Liberal Party state director, said it wasn't for him to address the issues inside the NSW wing of the party.
"I tend to stay out of the politics of other chambers," he told reporters in Sydney.
