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Julia Banks will not contest her marginal Victorian seat in protest at the dumping of Malcolm Turnbull.Credit:Eddie Jim

Her decision is a devastating blow for the government because its survival depends on its ability to hold ground in seats such as her electorate of Chisholm in suburban Melbourne,which she won by a margin of just 1.6 per cent at the last election after leaving a successful career in business.

"I have always listened to the people who elected me and put Australia's national interest before internal political games,factional party figures,self-proclaimed power-brokers and certain media personalities who bear vindictive,mean-spirited grudges intent on settling their personal scores,"Ms Banks said in a statement.

"Last week's events were the last straw.

"More important,the people of Chisholm know that I say what I think. They know that I will always call out bad behaviour and will not tolerate any form of bullying or intimidation. I have experienced this both from within my own party and from the Labor Party."

The announcement came after a frantic 24 hours of negotiation as Prime Minister Scott Morrison and Treasurer Josh Frydenberg urged Ms Banks to stay in Parliament and fight the next election to hold her crucial marginal seat.

Fairfax Media understands Ms Banks told the two leaders of her decision on Tuesday but could not be persuaded to stay because of her frustration at the way the Liberal party room toppled Mr Turnbull and the deputy leader,Julie Bishop.

Ms Banks did not name the powerbrokers but her colleagues told Fairfax Media she came under intense pressure from conservative colleagues in the lead-up to the leadership ballot on Friday.

Several MPs have named conservative Victorian MP Michael Sukkar as one of those who put pressure on MPs to vote for Mr Dutton but Fairfax Media was told he did not speak to,email or text Ms Banks last week.

Ms Banks held out against pressure to back Mr Dutton and voted for Ms Bishop in the first round and Mr Morrison in the second round of the leadership ballot.

She later tweeted her support for Ms Bishop,who backed the Melbourne MP during visits to her electorate when she was foreign minister.

In a rebuke to the conservative powerbrokers who blocked the rise of Ms Bishop and brought on last week's turmoil,Ms Banks said"I'm not done"in her statement on Wednesday morning.

"I am not giving up the fight for gender equality,"she said.

"The scourge of cultural and gender bias,bullying and intimidation continues against women in politics,the media and across business.

"In anticipating my critics saying I'm ‘playing the gender card'I say this. Women have suffered in silence for too long and in this last 12 months the world has seen many courageous women speak out.

"To young women and men reading this announcement,I say I've only ever aspired to inspire.

"If I've inspired any one of you to have leadership courage – that will sustain me."

Ms Banks was the only Liberal candidate to win a seat from Labor at the 2016 election,gaining Chisholm after the retirement of Anna Burke,the Labor MP and former Speaker.

Ms Banks will return to Parliament when it resumes on September 10 and stay until the next federal election to shore up the government's numbers,at a time when Labor is ready to exploit the absence of Mr Turnbull from the lower house.

Mr Turnbull is expected to resign from Parliament this Friday,leaving the government with 75 instead of 76 in the lower house of 150 and therefore putting it in a highly vulnerable position because one of its MPs,Tony Smith,sits as the Speaker.

The manager of opposition business in the lower house,Labor environment spokesman Tony Burke,ruled out making things easier for the government by offering a"pair"in the lower house – that is,removing a Labor MP from votes to cancel out the effect of Mr Turnbull's absence.

"A few people have been asking about whether Labor will offer to ‘pair'Malcolm Turnbull during the Wentworth byelection,"Mr Burke tweeted.

"There's a long explanation but in short ‘No'."

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