Liberal candidate Dave Sharma has condemned a "fake news" email which accuses his rival of withdrawing from the race because of a HIV diagnosis.
John Howard is going in to bat for the Liberal party in the seat of Wentworth after the independent candidate Kerryn Phelps became the victim of a vicious smear campaign claiming she was pulling out after being diagnosed with HIV.
The respected Liberal elder wants to win over "grumpy voters" disenchanted with the party after popular sitting MP Malcolm Turnbull was ousted as prime minister in August, The Australian reported on Thursday.
But he may face an uphill battle after the Liberal campaign for the by-election in the Sydney harbour electorate, which Mr Turnbull held by a near 18 per cent two-party preferred vote, took a turn for the worst.
The contents of an email, which has been circulating in recent days, emerged on Wednesday claiming Dr Phelps was withdrawing and telling recipients to vote for Liberal candidate Dave Sharma.
"Please DO NOT vote for her, just choose Sharma as your top choice only. Kerryn was diagnosed with HIV yesterday so no chance she will be running for election. Can you please help to remove Kerryn Phelps's poster if you see them because we don't have enough people to clean it up," it reads.
The email, seen by AAP, is riddled with typographical and grammatical errors and makes random and nonsensical references to people of Indian descent "who are much better than the convicts offsprings [sic]".
Dr Phelps, who is married to former teacher Jackie Stricker-Phelps, told AAP the email was "disappointing" and "false".
"I was warned there could be dirty tricks," she later told Nine Network.
"The fact is that they claim - they claim falsely that I'm dropping out of the race because I have been diagnosed with a serious illness, I think, also highlights the fact while we think that the stigma around HIV has gone, it clearly hasn't."
The Liberal party has fiercely denied any involvement in the email and Mr Sharma said it was "despicable".
"I condemn it for its smears and dishonesty," he wrote on Twitter. "And I condemn it for its stigmatisation of people living with HIV."
The Liberals are concerned they could lose Wentworth, which has been a conservative seat since it was created.
Internal party polling leaked this week shows Dr Phelps could get 55 per cent of the two-party vote and beat Mr Sharma to represent the seat in the federal parliament.
A Wentworth loss would also be a disaster for the Morrison coalition government, which holds power with a one seat majority.
"This could do enormous damage to the coalition government and I am genuinely concerned about the risk of a Liberal loss," Mr Howard told The Australian.
He will campaign in Wentworth with Mr Sharma on Thursday, ahead of Saturday's vote.
"I think I can win but it will be tough and close," Mr Sharma told Nine.