Malcolm Turnbull has beaten Peter Dutton 48-35 in a snap Liberal leadership spill.
The Prime Minister forced his rival to show his hand by declaring all leadership positions vacant as soon as the party room meeting started this morning.
Mr Turnbull won the vote and his deputy Julie Bishop was the only candidate for her role.
But the result is so narrow it is set to create ongoing problems for the Government.
Mr Dutton has now resigned from the frontbench creating a big gap in Cabinet that Mr Turnbull will have to fill.
However the ABC understands that despite Mr Dutton challenging him for the leadership, Mr Turnbull later offered that his rival could stay on in the Home Affairs ministry.
Politics in Australia is all about winning the next election, however, if a leader does not have the whole backing of his party the party can change leaders. This creates a reasonable stable political environment for the country. From an outsiders view this may seem chaotic, but it is better than other systems where they find themselves with a leader whom cannot be controlled by the party who elected him.