Western Sydney businessman Matthew Camenzuli launched an unsuccessful court bid to overturn the decision to select ministers Sussan Ley and Alex Hawke and backbencher Trent Zimmerman as candidates for their seats at the upcoming election.

Mr Camenzuli argued party members rather than a panel comprising Mr Morrison, NSW Premier Dominic Perrottet and former party president Chris McDiven should choose candidates.

If he had won the case there was also a strong chance he would have put nine other candidate selections at risk.

It is understood the NSW Liberal director used "campaign powers" to expel Mr Camenzuli.

Mr Morrison is due to call an election within days.

It is understood the party feared further court action would have damaged its chances of winning the election.

A senior Liberal source told AAP the state executive would meet on Friday to ratify the decision, but there was no guarantee it would be upheld.

"Mr Camenzuli was standing up for members' rights," the source said.

Australian Associated Press