The spectre of Peter Dutton as prime minister could cost the Coalition three marginal seats at the state election, Victorian Liberal insiders fear.

The brutal infighting at the top of the party is bad enough but things could get even worse for the Coalition locally if Prime Minister Malcolm Turnbull is replaced by Mr Dutton, a politician some in its Victorian branch have described as “toxic” to their prospects in the state.

Prime Minister Malcolm Turnbull and Peter Dutton in Question Time on Monday. Credit:Alex Ellinghausen

As instability and leadership speculation gripped Canberra on Monday, Victorian party insiders speculated that Mr Dutton as prime minister might cost the Liberals at least three marginal seats in the state at a federal election.

Victorian Opposition Leader Matthew Guy played down the threat in public on Monday but behind the scenes one Liberal conceded the dysfunction at federal level was a “gift” to the Andrews state Labor government.