The Family First Senator Bob Day has since introduced a compromise bill to remove the words "insult" and "offend" from the Act. Two Liberal senators are co-sponsoring the bill and at least half a dozen say they will cross the floor in support of the bill. The issue of free speech and how it interacts with section 18c of the Racial Discrimination Act is a totemic one for Liberals who believe it is too subjective to legally test whether someone can be offended or insulted. Party delegates wanting to record their commitment to freedom of speech attempted to place it on the agenda at Federal Council The motion called for the government to back the Day Amendment, which as one Liberal told Fairfax Media is "only half of what the Prime Minister promised" before the last election. But several sources who attended Federal Council told Fairfax Media that the Liberal party's federal director Brian Loughnane told delegates he didn't want the motion put up in a move widely perceived as the Prime Minister's attempt to shut down any hint of internal dissent. The motion was placed last on the agenda, which one delegate said was in the hope that the meeting would run over and the issue be left unaddressed.

The perception that Mr Loughnane was acting as a proxy for the Prime Minister is particularly vexed for Liberal Party members because the federal director is married to the Prime Minister's chief of staff Peta Credlin. This leaves members with the feeling they nowhere to go in the event they wish to raise concerns about one office with the other. According to sources present, the West Australian division stood firm and told Mr Loughnane it had no intention of backing down. There were no speakers against the motion and it sailed through. Party sources denied the story and insisted no conversations had taken place. A spokesman for the Prime Minister said the government's position on 18c had been clearly articulated. "Motions debated by the Liberal Party are a matter for the party organisation," the spokesman said.

Former Young Liberal president Tom White from the WA Division told Federal Council he respected the government's right to ditch the reform. "[But] that does not inhibit in any way the federal council's ability to express its own view," Mr White said. "Indeed it's my view that we have not only a right but a responsibility to express that view where appropriate," he said. "Of all the forums in all the political parties in all the nations on earth I would have thought this particular body to be particularly well placed to express a view on such a fundamental issue such as free speech," he said. On Tuesday, the Australian Law Reform Commission published its interim report into Commonwealth Laws that encroach on traditional rights and freedoms.

"Anti-discrimination law may also benefit from more thorough review in relation to implications for freedom of speech," the commission said. "In particular, section 18C of the RDA has been the subject of considerable recent controversy," he said. Family First senator Bob Day welcomed the law commission's report and said it showed the government why it should be brave. "They party is being too timid but it's great to see our West Australian cousins going into bat for free speech," he told Fairfax Media. "The Prime Minister down, they all know it's good policy and I would encourage them all to be brave," he said.

"Everybody says privately my amendment should get up, that the changes to the RDA should go ahead, but the influence of the party machine is very strong," he said. "I would encourage the Liberal Party members to stick to its principles and to do what needs to be done," he said. "Good policy is good politics," he reminded his Senate colleagues. Follow us on Twitter Follow Latika Bourke on Facebook