Scott Morrison has given a ringing endorsement to Warren Mundine in the face of Liberals leaving the party in protest over the dumping of candidate, Grant Schultz.

The Prime Minister accused Mr Schultz of "undermining" current member Ann Sudmalis, who will resign at the election after claiming she'd been bullied by colleagues.

Mr Morrison called Mr Mundine, a one-time Federal Labor President, a "first class man, a first class citizen" who's a "good bloke and a good mate".

Warren Mundine is set to make a run for the seat of Gilmore. (AAP)

Mr Schultz yesterday quit the Liberals and will contest the New South Wales south coast seat as an independent, after it emerged the Prime Minister would parachute Mr Mundine into the ultra-marginal electorate.

Announcing Mr Mundine's pre-selection in Nowra today, Mr Morrison accused Mr Schultz of "challenging" Ms Sudmalis and he was asked to withdraw.

"He chose not to do that and I'm not going to reward behaviour that undermines a sitting member," Mr Morrison said.

"You don't get to bully your way into a seat in Federal Parliament."

Mr Morrison said he made no excuses for backing in a good candidate, saying he believed Mr Mundine would win.

Mr Mundine, who lives on Sydney's North Shore, said he had already been housing hunting in the electorate.

And Mr Mundine reached out to Liberals who had quit, or threatened to quit, saying he would need them to win the seat.

Grant Schultz unleashed on the Liberal party, announcing he will run as an independent. (Supplied)

Mr Schultz, the son of long-term member for the neighbouring seat of Hume, the late Alby Schultz, said the party's "core values" had been betrayed.

The real estate agent told the local newspaper Mr Morrison "has taken the party to the days of Eddie Obeid and the faceless men of the Labor Party".

Mr Schultz told the ABC it was in direct response to being "betrayed".

"To the betrayal of the party's core values of honesty, democracy and integrity," he said.

"It's very disappointing to see that, I must say."

The Liberals hold the seat by less than one percent and the anger and internal uprising over Mr Schultz's axing will make it even harder to retain the seat at the May election.

Mr Schultz said the Prime Minister had not contacted him to explain his actions. (Supplied)

Mr Schultz said the Prime Minister had not contacted him to explain why Mr Mundine was being parachuted in.

In 2009, Mr Mundine said Bill Shorten would be the next Prime Minister, but today defended his political fence jumping by saying Labor policies were working against the "working man" .

"We've got to stop Bill," he said.

"We've got to stop Bill Shorten's team."

The man who also once called Australia Day "Invasion Day" and called for the nation's day of celebration be moved to January 1, said there were far more important issues he wanted to confront, although he didn't back away from his beliefs.