Prime Minister Scott Morrison has moved to save embattled backbencher Craig Kelly from being thrown out of Parliament in a risky intervention that will ignite a fresh war between the Liberal Party's conservative and moderate forces.

Mr Kelly, a key ally of former prime minister Tony Abbott who helped engineer the demise of Malcolm Turnbull's National Energy Guarantee, is facing certain defeat in a preselection challenge by Kent Johns in the safe southern Sydney seat of Hughes.

Liberal MP Craig Kelly could be saved from a preselection defeat under a divisive new plan. Credit:Dominic Lorrimer

The backbench MP has threatened to run as an independent at the next election if he is dumped and has not ruled out sitting on the crossbench next year - a move that would further weaken the Coalition's grip on power in the House of Representatives.

As MPs return to Canberra on Monday for the final sitting week of the year, discussions were held over the weekend about using the emergency powers of the NSW Liberal Party state executive to re-endorse Mr Kelly, which would kill off any preselection. It would head off any damaging fallout from Mr Kelly's likely defeat but infuriate moderate MPs who want to see the back of him.