Prime Minister Malcolm Turnbull has been publicly ridiculed by members of his own party for suggesting the Liberals are not run by factions.

In a sign there is still red-hot anger among many of the party faithful over Tony Abbott's removal, Mr Turnbull faced howls of laughter and derision during his speech to the NSW Liberal Party State Council in Sydney on Saturday.

After touching on trade and terrorism, Mr Turnbull turned to the topic of the Liberal Party itself.

"We are Australia's largest grassroots political organisation," he said. "The Labor Party, if it ever was a grassroots organisation, ceased to be a long time ago."