The former treasurer plans to quit politics at the next election expected in 2010 but hasn't ruled out making an early exit if the party finds the right candidate to run in his seat of Higgins in Victoria.

Twin by-elections, in Costello's and Nelson's seats, will compound the political headache for Turnbull, who is lagging in the opinion polls and trying to stem damage caused by cracks in the Coalition over issues such as tackling climate change.

Nelson is urging colleagues to support Turnbull and believes the Coalition can win the upcoming federal election. ''The one thing that can be guaranteed is that the Liberal Party will not win the next election if it is not unified, if it does not have a sense of purpose, if it does not base its decision making in principle,'' he said.

Turnbull has tried to frame the Bradfield by-election as an ''important opportunity for voters to express their views on the Rudd Labor Government's economic management, which has seen unprecedented levels of reckless spending and record debt which will lead to higher taxes and higher interest rates''.

In the Liberal heartland, voters are expected to resoundingly reject Labor's policies, and anything less will reflect poorly on the Liberal leadership, particularly Turnbull.A bitter battle for Liberal pre-selection will have the same impact. More than a dozen candidates are expected to covet the party's endorsement and the field is wide open after one of the touted front runners ruled out running.

Arthur Sinodinos former prime minister John Howard's long-time chief of staff isn't putting his name forward for ''personal reasons''.

''I know the sacrifices involved in a serious political career, having served at the highest levels of government for an extended period,'' Sinodinos said.

In the race to replace the retiring MP, many other names have been bandied about, including Nelson's adviser Simon Berger, Julian Leeser from the Menzies Research Centre and Tom Switzer from the Institute of Public Affairs. There will be stiff competition because Bradfield is one of the safest Liberal seats.

Nelson secured 59 per cent of the primary vote at the 2007 election but Labor and Greens candidates could only manage 27 per cent and 11 per cent respectively.

Labor has deemed it's a waste of money to run a candidate in the by-election, but the Greens have taken the opposite view, saying they will ''be campaigning strongly to give the people of Bradfield a good alternative to the Coalition''.

The Liberals will retain the seat. But if there is a swing against the party on its home turf, this will be a major blow to Turnbull's leadership and will be a poor sign when it comes to the party's chances of securing marginal seats crucial to their chances of winning the next federal election.

But Nelson's departure could have longer-term implications for Turnbull if he manages to retain the leadership.

Turnbull is a moderate in a party set to lose several similarly-minded MPs, including Nelson, Petro Georgiou, Danna Vale and Senator Judith Troeth. Will Turnbull's position become untenable if the party lurches further to the right?

An emotional Nelson offered some advice for his successor.

''The most important thing, I think for our leadership going forward is to understand and respect our history, to make decisions and build policy which is deeply rooted in principle, to make the judgements between what's popular and what is right, and on big issues in particular, we need always to do what is right and bring our own colleagues along with us,'' he said.

The former leader deserves immense credit for stepping into the breach when Costello declined to take on the leadership after the Coalition was turfed out of office in 2007. Nelson will deliver his valedictory speech when Parliament sits in September, but has no firm work plans for life after Parliament. He hopes to use his skills to make a ''positive contribution'' in an area of ''policy interest'' which covers health, defence and education.

Danielle Cronin is Political Correspondent.