The ABC has learnt the Federal Coalition is being rocked by claims former treasurer Peter Costello made a bid to return to the political stage late last year.

The ABC's 7.30 program has found bitter factional in-fighting was triggered by the purported move by Mr Costello, who demanded a young MP step aside to accommodate him.

It is a claim Mr Costello steadfastly denies, but many of his former colleagues believe it, with Victorian MPs privately saying he has become bored and frustrated that Tony Abbott looks headed for the top job.

The dispute has laid bare the deep divisions in the Liberal Party’s Victorian branch, which threaten the Coalition at a time when it believes government is within its grasp.

The claims can be traced back to a conversation purported to have taken place in Melbourne before Christmas between Mr Costello and his old friend, prominent Victorian Liberal Michael Kroger, when the former treasurer raised the possibility of returning to Canberra.

It is understood Mr Kroger has told several federal Liberal MPs that Mr Costello asked him to explore whether Kooyong MP Josh Frydenberg might step aside for him.

The Member for Wannon, Dan Tehan, and the Member for Aspen, Alan Tudge, are also believed to have been options.

Mr Kroger rebuffed the idea and the pair have not spoken since.

Kelly O'Dwyer and Peter Costello

The essence of the chat was outlined to many MPs this week in the course of queries about bitter divisions in the Victorian Liberal branch.

Mr Kroger told them he had dismissed the comeback idea as a bad one, but suggested if Mr Costello was keen he should go after his old seat of Higgins, which is now occupied by his former staffer Kelly O'Dwyer.

Mr Kroger was unavailable for an interview but has told colleagues for Mr Costello, the idea of ousting the woman he had promoted and whose campaign he had launched apparently did not appeal.

Nor did the idea of approaching another old staffer, Casey MP Tony Smith.

The fact is, they would not have agreed to it anyway - all have recently been preselected again.

Like Mr Frydenberg - regarded by some as leadership material - the MPs are young, ambitious, and see a long-term future in the Liberal Party, something Mr Costello was encouraging when he bowed out in late 2009.

Mr Costello has denied having any discussion with Mr Kroger about a comeback and says he has not spoken to him in a long time.

It is understood Mr Kroger has maintained to colleagues the conversation did take place, and some Victorian MPs are taking the claim seriously.

They declined to go on the public record but say Mr Costello regrets his decision to quit politics with the Coalition in such a commanding position in the polls.

Mr Costello dismisses that as nonsense and has previously told 7.30 he has well and truly moved on from politics.

Payback

Vulnerable position: Senator Helen Kroger ( Alan Porritt/AAPImage )

He says talk of a return is payback for an ugly internal brawl over the Victorian Senate ticket.

Mr Costello's estranged friend, Mr Kroger's ex-wife Senator Helen Kroger, who is the party whip in the Senate, was dumped to the vulnerable third spot on the senate ticket.

Her supporters think Mr Costello was pulling the strings, something he also strenuously denies.

But it gets nastier. On Tuesday, as Parliament House was abuzz with preparations for the budget, the Opposition Leader in the Senate, Eric Abetz, paid Senator Kroger a visit.

It is understood he told her that Victorian Senator and Manager of Opposition Business Mitch Fifield - a close friend and former staffer to Mr Costello - could not work with her and her position as whip was untenable.

Senator Kroger contacted Mr Abbott to alert him.

He was unaware of the machinations and indicated he thought she was doing a good job.

He told Senator Abetz to back off after Queensland Senator Ian Macdonald threatened to call a spill of all the senate leadership positions.

It all adds up to the kind of division Mr Abbott is desperate to avoid when the Coalition is so far ahead of the Government in the polls.