Australian government at risk of losing majority in crucial by-election

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The by-election was triggered when Malcolm Turnbull quit politics after being deposed as prime minister in August.

Mr Morrison said he was dubious about the Liberals chance to hold onto the seat when asked if the party's candidate Dave Sharma is expected to lose.

A defiant Mr Morrison told a Liberal function the result was "not unexpected" however he did not have a "vanquished spirit".

"It was said if we won the seat of Wentworth, it would make history, and, my friends, we have made history today", she said.

It was not clear what would become of that plan following the election's results, but with Morrison now effectively a lame duck prime minister, its prospects appeared diminished.

Michelle Grattan, a political commentator, said a Liberal loss would be a "devastating blow for the Prime Minister".

She may also lend support for a national integrity commission which has been promoted by Labor, the Greens and crossbenchers for some time.

Coupled with recent reports which suggest an imminent National Party leadership challenge, and the flatly-received announcement that Australia was open to moving their Israel embassy to Jerusalem, Sharma struggled to stave off Phelps.

"This is a bad night for the Liberal Party", Liberal MP Trent Zimmerman told the ABC on Saturday. "So I would encourage people to think about that carefully".

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Mr Morrison will have to seek the support of Dr Phelps or another crossbench member in order to be assured of confidence on the floor of parliament.

It's the first time in their 117-year history the Liberals have lost the Wentworth seat, showing the depth of voter reaction to Australia's latest change of leadership without the people having their say.

Ms Plibersek declined to rule out talking to crossbenchers about a no confidence motion in the government.

"This is on the Liberals, not on Dave Sharma", Mr Morrison told the packed function room.

A ReachTel poll published on Wednesday showed that Sharma's primary vote was falling with three days to go before polling on Saturday and that the Liberals were in danger of losing the traditionally ultra-safe seat in Sydney's affluent eastern suburbs.

Phelps said she would be setting two priorities - action on climate change and getting asylum seeker children off Nauru.

Mr Bragg is close to Malcolm Turnbull, ran the Liberals' Yes campaign in the same-sex marriage plebiscite and is president of the party's Paddington branch.

"I've never been so proud, she's done so many incredible things in her life and in her career and this has got to take the cake".

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