Long-time Tony Abbott supporter conservative commentator Andrew Bolt says the knighthood decision could be fatal for his leadership.
"This is just such a pathetically stupid - gosh, I didn't mean to be that strong because I actually like Tony Abbott very much - but this is just such a very, very, very stupid decision, so damaging that it could be fatal," he told Macquarie Radio.
"I thought it was verging on fatal already but this is too much."
Speaking to reporters at the Australian Open Tennis grand slam in Melbourne, Ms Ley says the Coalition's match is not over, "Sometimes you can be down match point and still recover."
"Sometimes you can make a silly drop shot in the middle of the game and you can win that game and go on and win the match."
The Prime Minister stands by his decision to award an Australian knighthood to the Queen's consort, but he has promised to be more consultative with Coalition colleagues around such awards in the future.
The knighthood furore has enflamed concern within the Coalition about the Prime Minister's leadership style and the level of the control of Mr Abbott's trusted Chief of Staff Peta Credlin.
The Prime Minister says he did not consult with Ms Credlin over his decision to bestow Australia's highest honour on the British royal.
Yesterday, media baron Rupert Murdoch used social media to instruct the sacking or resignation of the Prime Minister's Chief of Staff Peta Credlin.
The News Corp chief tweeted that Ms Credlin should to "do her patriotic duty and resign".
The Health Minister Sussan Ley says there is no need for Mr Abbott's Chief of Staff to go, "My personal reflection is, as a mate, she is an outstanding contributor to the Liberal Party."
The Government is behind Labor in the polls.
The latest Morgan poll, released on Wednesday, gave Labor 56.6 per cent of the two-party preferred vote.
The Prime Minister's approval ratings, in a Seven News ReachTEL poll of 3,700 people nationwide, have slumped nearly 10 per cent, down to just 22 per cent overall.
Ms Ley has urged colleagues to not lose focus in the main game, "I don't pay attention to the polls. The polls have moved all over the place on so many different occasions in my time."
"We are committed to delivering the plan that we embarked on when we were elected to Government for the long term, for the next generation and as Health Minister, that is what I am doing."
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