The Liberals have launched a sharply negative attack on the independent Wentworth candidate Kerryn Phelps, distributing tens of thousands of leaflets in Wentworth warning of “uncertainty” and suggesting that a vote for Phelps would usher in a Labor government.

If Phelps is successful on 20 October, the Coalition will become a minority government dependent on the support of independents. Phelps has publicly announced that she will direct preferences to the Liberals, that she is an economic conservative and that she would guarantee supply if she is elected.

But the leaflet insinuates she is a Labor stooge and could deliver government to Labor.

Kerryn Phelps says the Liberals are ‘unwilling’ to fight her on policy. Photograph: Joel Carrett/AAP

“A vote for Phelps is a vote for … Labor?” says the leaflet, which carries an official authorisation from the NSW Liberal party’s director, Chris Stone, in six-point text, as required by law. It includes tear-outs from the Australian that reported she had hired a former Labor staffer to assist her campaign.

There is no mention of the Liberal candidate for Wentworth, Dave Sharma.

An angry Phelps said she was aware of the brochure and expected the attack.

“They perceive me as a threat and they are unwilling to fight me on policy,” Phelps said. “He [Sharma] needs to defend why they don’t have a policy on climate change, their refugee policy and freezing the Medicare levy.

“Nasty pamphlets, with the most horrible photo of me they could find, really tells me they are scraping the bottom of the barrel.

“People know that the reason for instability in our government is due to the Liberal party fighting itself.”

Phelps said some Liberal volunteers had come up to her and apologised to her about the negative brochure.

The sharply negative turn in the campaign in Wentworth comes as polls show the Liberals are struggling to hold the once blue-ribbon seat of the former prime minister Malcolm Turnbull.

A ReachTel poll commissioned by another independent, Licia Heath, who organised a community campaign for another high school in the area, showed the Liberals holding on 51-49 two-party preferred. But predicting the outcome in a race with 16 candidates and an unpredictable flow of preferences is difficult.

The campaign has also been marred by widespread removal of campaign corflute posters, prompting the Labor candidate, Tim Murray, to lodge a complaint with the Waverley police.

A spokeswoman for Murray said he lost hundreds of corflutes on 24 September, and it was the same night that Sharma’s campaign was seen putting up their posters.

A spokesman for Sharma said the campaign became aware of the poster theft though social media. “We do not condone those activities,” he said.

Phelps also lost more than 100 posters and talked to the police but decided against making a formal complaint.

Meanwhile, Katter’s Australian party (KAP) disendorsed candidate Robert Callanan after the Sunday Telegraph revealed he was a former director of a company associated with a high-class brothel.

Callanan, from Bellevue Hill, was described as the owner of an accountancy business, a treasurer of the Sydney United soccer club and a former member of the army reserve. His CV did not disclose his directorship of Sydney Best Catering Pty Ltd, which has the same ABN number as The Penthouse – The Ultimate Gentlemen’s Club in Sydney’s Pitt Street.

Thirteen of the 16 candidates will face off at a forum at the Bondi pavilion on Monday night, organised by the Bondi Beach precinct committee, which fought hard last year to save the historic building from redevelopment.

At this stage Sharma and Australian Liberty Alliance candidate, Tony Robinson, have declined. The Katter party is now unlikely to attend as well.