Trouble on horizon for Abbott as Turnbull hangs on

Former Opposition Leader Malcolm Turnbull has set a new time bomb ticking in the Liberal Party with a backflip on his decision to quit politics at this year's election.

Turnbull's announcement that he will again contest the blue-ribbon Sydney harbourside seat of Wentworth means present leader Tony Abbott will be looking over his shoulder at the man he ousted by one vote last December.

For the moment, Turnbull will be focusing on re-election and will make no overt moves during the campaign, but if the Coalition loses - as polls continue to predict it will - Abbott's leadership will be vulnerable.

Neither Turnbull nor Abbott was a popular choice as Liberal leader.

Turnbull, a dynamic, ambitious and talented former lawyer and merchant banker, took the job from Brendan Nelson, elected to replace John Howard after his crushing defeat by Labor in 2007, because there was no other real alternative.

But in the 11 months of his leadership Turnbull alienated many within the party by his management style, serious political gaffes and, finally, an unpopular deal with the Government to support Prime Minister Kevin Rudd's now all-but-defunct greenhouse emissions trading scheme.

Abbott has regained some of the Opposition's lost ground in opinion polls, but the Government continues to hold a commanding lead and Abbott is a distant second as preferred Prime Minister.

Turnbull was refused a place back on the front bench following the resignation of Howard-era minister and Liberal Senate leader Nick Minchin - a key player in Abbot's coup - and is unlikely to be promoted before the election.

Abbott said that he would go to the election with his existing shadow ministry, but that he expected Turnbull would have a "senior role in the next Coalition government".

He said that despite their earlier differences Turnbull remained a good friend and their relationship was cordial and candid.

"Malcolm has star power. He is a very serious and substantial person," Abbott said.

The Government believes Turnbull will continue to be a threat to Abbott.

"Well, I would reckon that Tony Abbott wouldn't be popping any champagne corks tonight," Treasurer Wayne Swan said.

"The Liberal Party has had four leaders in a very short period of time, and I would expect that this just reflects further instability yet to come."

Turnbull, whose seat embraces the millionaires' strip from Bondi to Double Bay, Point Piper and Vaucluse, said he had been overwhelmed by the urgings of constituents and party members, both personally and by "hundreds" of emails and letters.

"The most important service I can render is to continue to represent the people of Wentworth with the commitment, the conviction and energy which I have always sought to bring to the last 5 years of my parliamentary service," he said.

He said the Government had shown itself to lack both competence and commitment.

"Its financial mismanagement surpasses even the recklessness of the Whitlam years and the Prime Minister's abandonment of the central element in his climate change policy [the ETS] - measures which he said were necessary to combat the greatest moral challenge of our times - constitutes an extraordinary act of political cowardice," Turnbull said.