Senior Liberal figures believe Prime Minister Scott Morrison is trying to oust the party's preselected candidate for the marginal NSW seat of Gilmore and reinstall sitting MP Ann Sudmalis in a bid to bolster the number of women standing for winnable seats.

Members of the state executive are mystified that they have not yet been asked to formally endorse real estate agent Grant Schultz as the Liberal candidate for the south coast seat, even though he was chosen by local preselectors more than a month ago.

Prime Minister Scott Morrison, with outgoing Gilmore MP Ann Sudmalis in 2018. Credit:Rebecca Fisk

In September, Ms Sudmalis announced she would quit politics, citing "branch-stacking, undermining and leaks" in the Liberal Party. Labor is widely expected to pick up the seat, which Ms Sudmalis holds on a wafer-thin margin of 0.7 per cent.

Mr Schultz - whose father Alby was a state and federal Liberal MP - won an uncontested preselection ballot on December 12 with the support of 40 out of 49 local members. But his position is yet to be formally endorsed by the state executive.