After a week of mounting pressure on Turnbull's leadership over his handling of energy policy and election strategy, the prime minister used the regular Tuesday party room meeting to spill the party leadership to attempt to head off a growing conservative-led move against him.
Mr Turnbull won the ballot 48 to 35, leaving the party divided, and his position seemingly untenable.
The deputy leadership was also declared vacant, but Julie Bishop was the only person nominated so hung on to her role.
Under headlines such as "PM's leadership on knife edge" major papers said some government members were gauging support for Home Affairs Minister Peter Dutton to replace Turnbull. "This might be a play to get Peter Dutton out of the way before the election", political reporter Mark Riley told Sunrise.
Sky News is reporting that after Mr Turnbull called the spill, Mr Dutton put his hand up to challenge.
Mr Dutton tweeted on Saturday that he supported the prime minister.
Mr Pyne described his Liberal colleagues stoking leadership tensions as "cowards".
Australian Prime Minister Malcolm Turnbull has ditched plans for the country to reach emissions targets aimed at combatting climate change.
"I think the public would react very negatively to another change of leadership without them having a vote".
Mr Turnbull said he would not proceed with the emissions target - part of his National Energy Guarantee (NEG) - because it had no prospect of passing through the House of Representatives, where he has only a slim majority.
"I don't actually expect a challenge today, but we'll wait and see", he told the ABC on Tuesday.
While the margin was clear, Dutton's numbers are strong enough to produce lasting instability and immediate speculation of a second challenge.
Adding to the prime minister's woes have been a string of poor poll results.
Energy policy, Pauline Hanson and Tony Abbott are all contributing factors to Turnbull's woes, Professor Jennifer Curtin says.
Labor frontbencher Anthony Albanese said the prime minister should call an election, if he survives the week.