Liberal sources have confirmed to the ABC the party will direct preferences to One Nation in the upcoming West Australian state election.

Key points: Mr Sinodinos says Liberals must treat One Nation like any other party

Mr Sinodinos says Liberals must treat One Nation like any other party One Nation has evolved since its inception, Sinodinos says

One Nation has evolved since its inception, Sinodinos says Speculation George Christensen may join Australian Conservatives movement

The deal means the Liberals will preference One Nation ahead of the Nationals in the Upper House in regional areas.

In return, the Liberal party is calling on One Nation to preference the party above Labor in all Lower House seats they are contesting.

WA Premier Colin Barnett said the aim of the deal was to keep Labor out of power.

"I've had a view and I am satisfied with this outcome," he said.

"It is unusual but it is a practical pragmatic decision by the Liberal Party because what we're out to do is to retain government."

The major parties are concerned about their electoral fortunes in upcoming state elections in Western Australia and Queensland amid the resurgence of Pauline Hanson and her party.

Industry, Innovation and Science Minister Arthur Sinodinos was asked whether the Liberals would seriously consider preferencing One Nation ahead of The Nationals in at the March 11 WA poll.

"The One Nation of today is a very different beast to what it was 20 years ago — they are a lot more sophisticated, they have clearly resonated with a lot of people," Senator Sinodinos said.

"Our job is to treat them as any other party. That doesn't mean we have to agree with their policies.

"So when it comes to issues of preferencing and the like, we have to make decisions — in this case, it's a state decision, it's not a federal decision — based on the local circumstances."

In 2001, then-prime minister John Howard called on One Nation to be preferenced last. Senator Sinodinos was Mr Howard's chief of staff.

"You look at these according to local circumstances, you look at the way these things have evolved," Senator Sinodinos said.

"This party has evolved as well.

"There are a lot of people out there who at the moment are mad as hell, as it were, and it's going to take some time for policies, I think, to seep through to them and convince them that the way of One Nation is not the way to go."

Liberals 'cuddling up' to One Nation: Shorten

Any benefit flowing from this preference deal in the Lower House is based on the ability for "how to vote" cards being handed out.

Questions will be asked whether One Nation will have enough supporters to man polling booths across the state, and Liberal sources have confirmed they will not be providing One Nation with any assistance.

The deal could prove a difficult balancing act for Ms Hanson, who opposes Mr Barnett's plan to privatise the state's electricity grid.

Opposition Leader Bill Shorten has roundly criticised the deal, and said Labor would not enter into any agreement with One Nation.

"I'm staggered that on one hand the Liberals spend so much time telling Australians that they dislike One Nation's policies, but then they cuddle up to One Nation when the Liberals get desperate," he told reporters in Melbourne.

"In politics, you've got to stand for something.

"John Howard didn't give his preferences to One Nation. I won't give our preferences to One Nation."

Speculation Christensen will follow Bernardi

In the wake of South Australian Senator Cory Bernardi's split with the Liberal party earlier this week, speculation has been rife about whether any other Coalition MPs could join the new Australian Conservatives movement.

One person garnering plenty of attention is Queensland LNP member George Christensen, who has been one of the most vocal members of the Coalition backbench in advocating changes to the Government's policies.

"He has had issues around sugar, other issues because of the downturn in the mining and related sectors," Senator Sinodinos told ABC Insiders.

"My view is he is standing up for his electorate, he has got potential and I think he should stick around."

Senator Bernardi earlier defended his decision to leave the Coalition, after garnering significant criticism for running as a Liberal candidate just seven months before splitting from the party.

He maintained the Coalition was straying from key conservative values, but noted he was wary of criticising his former colleagues too much and giving the Labor party ammunition against the Government.

"I want to see a Coalition government re-elected," he told Sky News.

"But I do recognise there's a level of distrust with both of the major parties, and people are looking for checks and balances and cops on the beat in the Senate.