In the end, resistance was futile.

Malcolm Turnbull has called the royal commission he had spent a year and a half opposing.

"Government policy remains the same until it is changed," he conceded.

To stop an inquiry happening against his will, he had to give in.

"While we regret the necessity of the decision, we have taken it is in the national economic interest," Mr Turnbull said.

Since April last year, the Government gradually squeezed the banks harder as it tried to fend off the escalating push for an inquiry.

It forced them to appear at parliamentary inquiries, promised a new financial complaints-handling body and ordered reviews and inquiries.

But none of the counter-measures was enough to silence the clamour.

Turnbull failed to quell drumbeat of demands

Prime ministerial assurances about "strong and immediate action to ensure the highest standards of conduct by banks" and the "greatest level of protection for their customers" had failed to quell the drumbeat of demands.

Unsurprisingly Labor and the Greens persisted, but damagingly for the Government its own backbenchers were gradually signing on to the campaign, turning it from a background drone into a thundering roar.

This week, the political heat was intense.

Nationals senator Barry O'Sullivan has been in cahoots with his political adversaries the Greens, crafting the terms of reference for an inquiry that he was prepared to move despite the embarrassment that would cause the Government.

Ministers heavied Senator O'Sullivan and temporarily delayed his plans.

But the bank inquiry could not be repressed and Mr Turnbull had to call the inquiry he did not want and now says he doesn't "relish".

"I think we are all aware of the circumstances in the Parliament," he said.

The PM acknowledged that it was going to happen whether he liked it or not, so to control the process he would have to give in and get involved.

It means he can set the terms of reference, choose the royal commissioner and decide how long it will run.

But 18 months worth of saying "no" could not be ignored as this morning he finally said "yes".

PM admits royal commission 'regrettable but necessary'

Avid advocacy by the Nationals has heightened existing Coalition tensions and this uncomfortable prime ministerial announcement is regarded by some in the Nationals as a reward for not giving up.

Mr Turnbull noted this morning that Liberals including Julian Leeser, Ann Sudmalis and Warren Entsch had been agitating too.

He is not saying he agrees with them — Mr Turnbull still thinks it is a bad idea.

Rather than pretend he has changed his mind, the Prime Minister awkwardly explained the pragmatic reality that drove this announcement.

"This is essentially a regrettable but necessary action," he said.

"It is clear that the speculation and the uncertainty and the politics around this issue require the Government to take control of the inquiry issue."

Taking control can be read as containing it.

He wants to ensure it does not drag on and does not shoot off in unexpected directions.

"It will not put capitalism on trial," Mr Turnbull said.

This unwanted royal commission is evidence that the anti-bank sentiment was not going to be easily soothed.

It is also a demonstration that tight parliamentary numbers can create unusual allegiances and divert even staunchly-held government positions.