Victorian Liberal leader John Pesutto threatens Moira Deeming with ...

Rogue Victorian Liberal MP Moira Deeming could be expelled from the party after threatening to take legal action to reverse her suspension from the party room.

Key points:Victorian Liberal Leader John Pesutto has flagged Ms Deeming could be expelled from the partyPeter Dutton says federal intervention in the strife-torn Victorian branch is not out of the questionFrustrated state MPs are backing Mr Pesutto and attacking "terrorists" within the party

Victorian Liberal leader John Pesutto confirmed this morning that he was considering trying to have Ms Deeming expelled, as the fallout from her involvement with an anti-trans rights rally organised by activists Mr Pesutto alleged were associated with neo-Nazis continues to roil the party.

"That's on the table, it's been reported publicly, but I'm going to be consulting with my colleagues on this," Mr Pesutto told ABC News Breakfast.

"Obviously that's a very serious thing. We want to reform the party, we want an inclusive, welcoming party that's focused on being a good opposition and holding a corrupt government to account. We can't do that, if we're constantly distracted by one issue or another." 

The threat to have Ms Deeming expelled came as federal Opposition Leader Peter Dutton admitted the Victorian party was not a credible alternative government and threatened to stage a federal intervention to resolve the crisis.

Pesutto calls for unity but threatens consequences for rebels within the ranks

Mr Pesutto expressed frustration at the damage to the opposition's public image caused by bitter internal warfare spilling into public.

"There's going to be more of this, there are more challenges. There's a small group who are determined not to let this process proceed. I will have that process proceed and my colleagues overwhelmingly support me," Mr Pesutto said.

"I'm calling on all MPs to get together and unify, and if they don't there are processes the party always has at its disposal. I think this is a very serious step if it's taken, but there's already a number of things that the party room is considering." 

First-term MP Moira Deeming was elected to the state's upper house in November.(Facebook)

Ms Deeming was suspended in March after participating in an anti-trans rights rally that was gatecrashed by neo-Nazis.

Mr Pesutto had initially asked for Ms Deeming to be expelled from the party, but backed down after the MP defended herself in a partyroom meeting.

Ms Deeming claims that Mr Pesutto has reneged on an agreement to publicly exonerate her of any connection to neo-Nazis and to confirm her return to the party room following her nine-month suspension. She has threatened legal action to hold him to the alleged deal.

Mr Pesutto said he had never claimed Ms Deeming was a neo-Nazi or linked to neo-Nazis, and that he would not bow to her demands. 

"I have said many times that what was put to the party room didn't include allegations that Ms Deeming was either a Nazi or a Nazi sympathiser, there were matters set out clearly in that and the party room endorsed that position. So I'm not going to rehearse that detail again," he said.

Supporters of Mr Pesutto, including his predecessor as leader, Matthew Guy, have this week accused a small number of "terrorists" of wreaking havoc within the party in order to pursue their personal agendas.

Pesutto allies call for party to swing behind him

Deputy leader of the Opposition in the Legislative Council, Matt Bach, said this morning there was a growing mood among his colleagues that Ms Deeming's place in the party would needed to be re-visited given Mr Pesutto's attempts to reform the party to be more inclusive and forward thinking.

"I think there's a growing mood in the team that this reform agenda that John's been talking about is so important," he told ABC Radio Melbourne.

Deputy leader of the Opposition in the Legislative Council, Matt Bach, has defended Liberal leader John Pesutto.(AAP: Joel Carrett)

"And I'm afraid there is a small, small fringe element within our party that we need to deal with and John Pesutto is determined to deal with."

He said there was no deal made between Mr Pesutto and Ms Deeming to publicly exonerate her as being linked to neo-Nazis, but he had repeatedly made it clear that that was not the nature of the allegation in the dossier.

"There was no need to correct the record and there certainly wasn't going to be, nor is there now going to be, any exoneration."

"John's done everything, quite frankly, that he said he would do as a result of this process.

"Moira, however, is going ahead, apparently, to take legal action against him and I know my colleagues are looking on that very dimly."

Speaking on ABC Radio National, federal Opposition Leader Peter Dutton expressed frustration at the dysfunction enveloping the state party and threatened federal intervention to resolve it.

"It hurts the brand and that's why it needs to be sorted out, it needs to be mediated so they can get back to their core business of putting pressure on, putting a spotlight on, a corrupt government," Mr Dutton said. 

"I wouldn't rule out federal intervention and I make it very clear to the Victorian division I want this mess sorted out as soon as possible."