Ted Baillieu has resigned as the Victorian premier and been replaced by former Liberal leader Denis Napthine, after the surprise resignation of Frankston MP Geoff Shaw from the Liberal party destabilised the government.
An ashen-faced Mr Baillieu emerged from a special party-room meeting at the Victorian Parliament on Wednesday night after telling Liberal MPs he had decided to quit ''in the best interests of the government''. Mr Baillieu said he would remain in Parliament as the member for Hawthorn.
''I love this state, I love the Liberal Party, I love this role that I have had the honour to enjoy over the last two-and-a-bit years,'' he said at a press conference just before 8pm.
Mr Baillieu said he offered Dr Napthine his full support.
An emotional Mr Baillieu thanked his family and said ''the most important thing is the people of Victoria''.
Within minutes, Dr Napthine returned the compliment, saying Mr Baillieu had put ''his heart and soul'' into his role as premier.
''Ted is a great friend and colleague. I'm proud to call him a friend. Ted Baillieu has certainly served the state very well.'' Dr Napthine said his appointment was ''an honour and a privilege''.
Mr Shaw had earlier released a statement saying he had quit the Liberal Party because he no longer had faith in Mr Baillieu's leadership.
''I believe my actions reflect the general loss of confidence Victorians are feeling in the leadership of the government,'' he said.
Mr Shaw's resignation eliminated the Coalition's one-seat majority and it will now be forced to rely on the controversial MP's vote to govern.
Mr Shaw is being investigated by police after an Ombudsman's report found he abused his entitlement to a parliamentary vehicle.
Victorian Opposition Leader Daniel Andrews said Mr Shaw had sacked the premier and the government was beholden to him.
''It would seem that every piece of legislation, everything this government wants to do, will now have to be the product of a negotiation with Geoff Shaw,'' he said.
The story Napthine takes the reins after Baillieu's leadership crumbles first appeared on The Sydney Morning Herald.