Prime Minister Malcolm Fraser faces a challenge for his leadership of the Liberal Party and of the federal government.
The challenge follows the defeat at the polls last weekend of the Liberal Party government of Victoria, Australia's second largest state, as well as in a series of by-election defeats in other states.
Federal government policies, and Mr. Fraser's abrasive leadership, are being blamed for at least part of the reverses currently being suffered throughout Australia by the Liberal Party.
The challenge against Mr. Fraser is being undertaken by Andrew Peacock, former foreign minister in the Fraser government, who resigned from the Cabinet almost a year ago in protest against Mr. Fraser's style of leadership.
His challenge has been brewing throughout that year, but his supporters have been waiting for a credible electoral excuse before allowing it to be tested.
The leadership of the federal Liberal Party is to be resolved later this week at a meeting that will be attended by all 81 members of the Liberal Party in the Federal Parliament.
Twelve Liberals, including four ministers, have been recalled from overseas to attend the crucial meeting.
At present Mr. Fraser is thought to have support of a majority of members of the party. His supporters are eager that he win with a sufficiently large majority to deter Mr. Peacock from challenging again later in the year.
Mr. Fraser himself took over the party leadership in the same sort of challenge that Mr. Peacock is now attempting. Mr. Fraser failed at the first attempt at the end of 1974, but won about five months later.
The Victoria election result came as no surprise. It had been predicted in all the public opinion polls for months.
Still it came as a shock to the Liberal Party, which has been in government in Victoria for 27 years continuously. The Labor Party was swept to power with a swing of over 5 percent. It will hold a comfortable majority of at least eight seats.
The Liberal Party has long regarded Victoria as ''the jewel in the Liberal crown,'' as a former Liberal premier of Victoria has described it.