Peter Dutton has been elected unopposed as the new Liberal leader, and former environment minister Sussan Ley will become his deputy, while David Littleproud has emerged the leader of the Nationals unseating Barnaby Joyce.
Mr Dutton, the former defence minister, won a party room leadership spill in Canberra on Monday and will replace Scott Morrison who led the coalition to defeat at the federal election.
Mr Morrison congratulated Mr Dutton and Ms Ley on winning the leadership positions.
"They are incredibly experienced, well versed, deeply, deeply committed Australians to both the liberal cause and of course the cause of the nation and I think they'll do an outstanding job and I look forward to giving them all of my full support," he said.
"It was a good opportunity for me to thank my colleagues for their great loyalty and support over these past more than three and a half years and to do that both on my behalf as well as on behalf of my dear friend Josh Frydenberg, who we're all very sad couldn't be with us today.
"It's been a great privilege to lead the federal parliamentary Liberal Party and I hand it over to Peter and Sussan and wish them all the very best."
Ahead of the vote by Liberal MPs, Queensland's Stuart Robert said the pair would be unopposed.
"(I'm) super happy about the party room and the leadership team we're bringing in," he told Nine Network on Monday.
Mr Dutton is the first Queenslander to lead the Liberal Party since it was founded in 1944.
The Dickson MP had been touted as Mr Morrison's likely replacement since the coalition lost government on May 21.
Mr Dutton, a former police officer, had spruiked his credentials for the job of opposition leader.
"In a prime minister you need someone who won't buckle in hard times and will stand up for our country and I have proven that in the portfolios I've had," he wrote on Facebook.
"My work ethic is second to none and I have the skill and experience having served five leaders and have learnt from each."
Mr Dutton has pledged to take the party back to its core values and represent the aspirational "forgotten people" of Australia.
"We aren't the Moderate Party. We aren't the Conservative Party. We are Liberals," the post said.
Earlier on Monday, NSW Liberal senator Hollie Hughes said Mr Dutton would lead the party back to the centre as it looks to rebuild.
Former immigration minister Alex Hawke said the party had a strong history of accommodating both progressive and conservative Liberals.
"That's a strength, not a weakness and I think that blend is very important," he said ahead of the vote.
The party room was also expected to discuss some of the lessons to be learned from the coalition's federal election defeat on May 21.
"The party room is the opportunity for everyone to get together, to have a conversation, to share how things have gone, not just to elect their leadership team," Mr Robert said.
Mr Hawke said the Liberals were blindsided in the election.
"We were blindsided in areas of Brisbane, Sydney and Melbourne. Votes that went to the Greens, votes that went to the teals, this is something we have to look at, what policies will appeal to those people," he said.
Mr Robert also said he expected there would be more women on the front bench once Mr Dutton settles on a reshuffle.
"We've got so many talented women in our ranks and you'd expect that talent to be recognised and rewarded," he told Sky News.
