This combo of file photos shows Tony Abbott (left) and Malcolm Turnbull.

Reuters/Canberra

Conservative Australian Prime Minister Tony Abbott faced a challenge to his leadership when his popular communications minister launched a bid for the top office on Monday after months of speculation and poor showings in opinion polls.

Malcolm Turnbull, a multimillionaire former tech entrepreneur, said he would seek the leadership of the 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."

Turnbull was ousted as leader of the Liberal Party - the senior partner in the ruling coalition - by Abbott in 2009 and has consistently been seen as 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.

There was no immediate response from Abbott to Turnbull's challenge. Sky News reported that the vote would be held on Tuesday, just days before a crucial 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.

‘Gossip, games’

Abbott had earlier dismissed reports about a possible challenge as "gossip" and 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.

The February challenge to Abbott followed criticism of his leadership style and judgment, including his decision to award an Australian knighthood to Queen Elizabeth's husband, Prince Philip.

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% against the government in a by-election on Saturday.

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.