The Nationals have blown up their political marriage with the Liberals, sensationally walking away from the longstanding Coalition agreement after a disastrous election.

Nationals leader David Littleproud on Tuesday said both parties would be “taking a deep breath” and the Nationals would “sit alone”.

He said the decision — one of the toughest in his life — was made collectively by his party’s 19 members and was based on “principle”.

Littleproud said the Nationals were standing firm on four key policies that were important to people in regional Australia.

These were nuclear energy, divestiture powers to break up big supermarkets, a $20 billion investment fund that would disperse $1 billion a year on regional infrastructure, and universal phone services.

“It’s on a principle position of making sure that those hard-fought wins are maintained and respected, we continue to look forward,” said Littleproud.

“We look forward to what else we can do as a party and as part of an opposition now that we can shape the lives of regional Australians for the better.”

Littleproud said the Liberal Party, led by Sussan Ley, was “going on a journey of rediscovery” and it could do that without the “spectre of the National party imposing their will”.

“I think that we can and will work together when the Liberals decide what they want to be and much of the capital cities that they want to be able to be prosecuting their case in.”

Nationals senator Bridget McKenzie shed further light on the decision when she appeared to accuse the Liberals of “refusing” their policies.

“A reasonable request was put to a trusted partner and it was refused,” said McKenzie.

“Policies that we had fought for, that only a few weeks ago we fought an election on, policies that, in the main, rural and regional Australia backed.”

Liberal leader Sussan Key addressed media later on Tuesday, and said it was “disappointing” that the Nationals had decided to “leave the coalition”.

She said the Liberal party alone would be the official opposition to Labor, and the new shadow ministry would be drawn only from Liberal party members.

Ley said the Liberal party was on a mission to “modernise” and “rebuild” and could not commit to the four policies that the Nationals were wedded to.

“I think the Nationals came with specific policies that they were determined to adhere to at this point in time,” she said.

“They’re entitled to do that, and I respect their own party room processes.

“I simply asked that they respect ours, which are that we aren’t going to land on those four policies, or any for that matter, right here, right now in the form that they were presented to us.”

However, Ley said while the two conservative parties did not have to be “shackled together”, she was a committed “coalitionist” and was open to a reunion.

“The Nationals door remains open and our door remains open and we look forward with optimism to rejoining at some point in the future.”

The change in opposition doesn’t have a substantial impact on the government’s ability to pass legislation with Labor commanding a major majority in the lower house and needing only the Greens in the Senate.

Without a Coalition agreement, Labor has a significant electoral advantage with the Liberals holding fewer than 30 of 150 lower house seats and the Nationals 15.

Treasurer Jim Chalmers said the coalition was undergoing a “nuclear meltdown”.

“The Coalition now is nothing more than a smoking ruin. They are hopelessly divided on personalities and on policy,” he said.

“It shows that the new leadership has failed its first test. It shows that they’ve learned absolutely nothing from the last few weeks or indeed, the last few years.

“This is a nuclear meltdown in the Coalition.”

The Nationals won’t sit in shadow cabinet, meaning they won’t hold sway over policies and the half-dozen MPs who were around the table will take a paycut.

The Coalition last broke up in 1987 for about four months.

Littleproud left the door open for a future arrangement, saying the two parties would still work together to fight the Labor government. The break-up would give Ley the time and space to rebuild her party, he said.

Ley faces the task of rebuilding the Liberals after a wipeout at the May 3 election.

“They are going on a journey of rediscovery and this will provide them the opportunity to do that without the spectre of the National Party imposing their will,” Littleproud said.

Littleproud denied the Nationals were a drag on the Liberal vote in the inner cities.

Their policies were popular, especially in their regional seats, and others such as the push to scrap public sector working from home entitlements — spearheaded by Liberal senator Jane Hume — were electoral poison, he said.

-with AAP