Liberal MP Andrew Hastie will not contest for the leadership of the party, ending speculation about his political future.
Opposition Leader Sussan Ley has come under pressure as leader of the party following the Liberals splitting with the Nationals, with Mr Hastie and frontbencher Angus Taylor emerging as possible contenders.
But on Friday Mr Hastie ruled himself out of running for the party's leadership.
"I've previously stated that I would welcome the opportunity to serve my party and our country as leader of the Liberal Party," he said in a statement.
"But having consulted with colleagues over the past week and respecting their honest feedback to me, it is clear that I do not have the support needed to become leader of the Liberal Party.
"On this basis, I wish to make it clear I will not be contesting the leadership of the Liberal Party."
Mr Hastie had met with Mr Taylor on Thursday in Melbourne about a potential deal to run for the party leadership, but the talks ended in a stalemate.
The West Australian MP said he would continue to focus on immigration and energy.
"I believe that those families and our country are best served by a strong Coalition government, and I will work every day to make my party the very best version of itself," he said.
It comes as Ms Ley gave the Nationals a week to reconcile with the coalition before she crosses the Rubicon by replacing their leadership team.
Ms Ley has appointed acting spokespeople in portfolios previously held by Nationals MPs in shadow cabinet, following the junior coalition partner walking away from the political marriage.
Senior Liberals have been given acting roles to cover the Nationals' portfolio areas as the party is now the sole official opposition after the split.
The coalition splits its cabinet and ministry on a proportional basis between Liberals and Nationals.
The acting arrangements will be in place until the start of the second parliamentary sitting week in February.
Ms Ley said she would then appoint six parliamentarians to the shadow cabinet and two in the outer shadow ministry "on an ongoing basis".
Foreign affairs spokeswoman Michaelia Cash takes on the trade portfolio, health spokeswoman Anne Ruston picks up agriculture, energy spokesman Dan Tehan adds resources, and defence spokesman Angus Taylor has been given veterans' affairs.
Deputy Liberal leader and shadow treasurer Ted O'Brien has taken on the assistant treasurer portfolio, while environment spokeswoman Angie Bell adds water and emergency management.
Nationals leader David Littleproud walked away from the coalition when Ms Ley accepted the resignations of three Nationals senators from shadow cabinet after they voted against hate speech laws.
Shadow cabinet members are required to vote in line with the agreed coalition position or resign.
Mr Littleproud gave Ms Ley an ultimatum that all Nationals in the shadow ministry would tender their resignations if she sacked the three rebels, saying the decision was a collective party room one.
She accepted the dissenting trio's resignations, resulting in the walkout.
Nationals in the lower house abstained on the vote as they sought to move amendments in the Senate, which if accepted, would have resulted in them supporting the hate speech legislation.
The Liberal leader has reached out for talks to reconcile the coalition.
Mr Littleproud has turned down a meeting at least until after a party room meeting on Monday, when he faces his own leadership challenge from rogue backbencher Colin Boyce which is not expected to succeed.
"Following Monday's parliamentary meeting of The Nationals, I will attempt to meet with whoever is elected as their leader," Ms Ley said.
