Australian PM Abbott faces fight as rival launches challenge

Malcolm Turnbull, a multi-millionaire former tech entrepreneur, said he would seek the leadership of the ruling Liberal Party after being urged "by many people over a long period of time" to run amid criticism of Abbott's performance.

"Ultimately, the prime minister has not been capable of providing the economic leadership our nation needs," Turnbull told reporters at parliament house in Canberra.

"We need a different style of leadership."

Abbott vowed to fight the challenge, calling for a vote of party members later on Monday.

"I will be a candidate and I expect to win," Abbott told reporters. "Obviously, I am dismayed by the destabilisation that's been taking place now for many, many months and I do say to my fellow Liberals that the destabilisation just has to stop."

Abbott ousted Turnbull as leader of the Liberal Party - the senior partner in the ruling coalition - in 2009 although Turnbull has consistently been seen as a preferred prime minister.

However, his support for a carbon trading scheme, gay marriage and an Australian republic have made Turnbull unpopular with his party's right wing.

The challenge comes as Australia's $1.5 trillion economy struggles to cope with the end of a once-in-a-century mining boom and just days before a by-election in Western Australia state widely seen as a test of Abbott's leadership.

Abbott emerged badly weakened from a leadership challenge in February, which came about after weeks of infighting, and pledged a new spirit of conciliation.

He and his government have since consistently lagged the centre-left opposition Labor Party in opinion polls, helping to fuel speculation over how long his party would give him to turn things around.

Abbott had earlier dismissed reports about a challenge as "gossip", saying he refused to play "Canberra games".

Peter Chen, a political scientist from the University of Sydney, said Turnbull faced the same problem as Kevin Rudd, a former Labor prime minister toppled by his own party.

"He is popular with the public, but not necessarily within his own party, Chen said.

Abbott has continued to defy popular opinion inside and outside his party, despite pledging to be more consultative, blocking his MPs from supporting same-sex marriage and announcing an emissions reduction target criticised as inadequate by environmental groups.

He agreed last week to take in 12,000 Syrian refugees but the news was overshadowed by rumours of a cabinet reshuffle and an insensitive gaffe about climate change, caught by a microphone at a meeting, by Immigration Minister Peter Dutton.

A Fairfax-Ipsos poll published on Monday showed that voters in the seat of Canning in Western Australia could deliver a swing of up to 10 percent against the government in Saturday's by-election.

That would not be enough for Labor to win the seat but it would be seen as a disastrous outcome for Abbott's leadership just a year out from a scheduled general election.

The challenge to Abbott is the latest sign of political instability in Australia, which has in recent years been convulsed by backroom machinations and party coups that have shaken public and business confidence in government.

Rudd, elected with a strong mandate in 2007, was deposed by his deputy, Julia Gillard, in 2010 amid the same sort of poll numbers that Abbott is now facing. Gillard was in turn deposed by Rudd ahead of elections won by Abbott in 2013.

"If Abbott were overthrown, he will be the shortest reigning first-term prime minister to be overthrown," Rod Tiffen, an emeritus professor of political science at theUniversity of Sydney, told Reuters.

"It's pretty amazing to think that we will have had two prime ministers overthrown in their first terms, which hasn't happened since World War Two. This shows the degree of instability within parties that we now have."

Labor Party leader Bill Shorten, in a scathing press statement following Turnbull's announcement, dismissed the idea the Turnbull was capable of changing the government's trajectory.