Bridget McKenzie has resigned as agriculture minister and stepped down as deputy leader of the Nationals over the sports rorts scandal.
Embattled Senator Bridget McKenzie has resigned from the frontbench over sports funding decisions she made in her previous portfolio as sports minister, Prime Minister Scott Morrison announced on Sunday.
Mr Morrison made the announcement at a press conference in Canberra after receiving a departmental report that said Senator McKenzie breached ministerial rules in the so-called sports rorts scandal.
Deputy Prime Minister Michael McCormack will step in as agriculture minister.
Senator McKenzie was under fire for her actions as sports minister following a damning auditor-general's report.
It found a $100 million grants program favoured marginal and targeted seats, with the minister ignoring 73 per cent of Sport Australia's recommendations before the last election.
In January, the prime minister ordered his department secretary to look into the handling of the $100 million sports grant program, and particularly a $36,000 grant Senator McKenzie when she was sports minister awarded to a Victorian shooting club of which she is a member.
The probe conduct found she had failed to disclose membership of a gun club that was awarded a grant.
Mr Morrison said the report had concluded "the timing is such that the potential conflict should have been clear", referring to the senator’s membership of the Wangaratta Clay Target Club.
"The secretary found this was in breach of the ministerial standards," Mr Morrison said.
"On the basis of that, and it is a conflict of interest in the failure to disclose, the Minister has tendered her resignation to me this afternoon."
Senator McKenzie said in a statement that she also intends to resign from her position as deputy National Party leader, while adding that she accepts the finding of the report made by the Department of Prime Minister and Cabinet.
"I have always taken my role as a Minister of the Crown very seriously and I understand that the community expects parliamentarians to abide by the highest standards," she said.
"I maintain that at no time did my membership of shooting sports clubs influence my decision making, nor did I receive any personal gain. However, acknowledge that my failure to declare my memberships in a timely manner constituted a breach of the Prime Minister's Ministerial Standards."
The investigation was delivered to the PM on Saturday night and Mr Morrison said he'd spoken with the Nationals deputy leader, who then tendered her resignation as agricultural minister.
Labor leader Anthony Albanese said it was "about time" the minister resigned.
"But this scandal is bigger than one minister, and we still need to get to the bottom of these tawdry sports rorts," he said.
It is widely expected Queensland minister David Littleproud will take over as Nationals deputy leader.
Party members will meet in Canberra on Tuesday ahead of parliament resuming for the year on Tuesday.
Discussions continue on a Senate inquiry into the issue, which would also examine any possible role by the prime minister's office in the grants process.
Greens deputy leader Larissa Waters said it showed why a national integrity commission was needed.