The first sitting Victorian Liberal MP has called for John Pesutto to throw open his leadership position after he was found to have defamed an expelled MP.

“His assertion that he is the best person to lead the party can be tested, and good luck to him if he wins,” Bev McArthur, member for the Western Victorian region, told ABC Radio Melbourne on Friday.

“If he’s so confident about his position, then he can easily call a meeting of the parliamentary party and put his case forward and declare all positions vacant.”

On Thursday, Pesutto lost a Federal Court battle, with Justice David O’Callaghan awarding $300,000 in damages to former Liberal MP Moira Deeming after finding he implied she was associated with Nazis.

He made the defamatory comments in media interviews and a party expulsion motion following a March 2023 rally attended by Deeming.

McArthur said Pesutto should apologise. But she did not go so far as to say whether she believed he should quit as leader of the Victorian Liberals.

She also called for Deeming to be allowed to rejoin the party.

Pesutto did not step down as leader following the verdict, instead doubling down on the party’s future and saying the court ruling was disappointing.

“I’ve always been a fighter and I’ve always been a fighter for the right reasons and for the right people – the Victorian people,” he said on Thursday afternoon.

Another senior Liberal MP conceded it wasn’t a “good day” for Pesutto but denied his leadership was untenable.

“In terms of the parliamentary party going forward, he’s the leader and is basically doing a good job,” they said.

“We’ve got the government struggling.

“He’s holding them to account on the things that matter to people.”

The MP suggested a group of about a “handful” internal agitators remained “easily detected and predicted”, and a special partyroom meeting to vote on a spill motion wasn’t imminent.

The insider also said it was unlikely there would be a special meeting to deal with Deeming’s possible re-entry into the parliamentary party, with the next partyroom meeting scheduled for February.

The loss was a “gift to the Labor Party” after months of unsteadiness, Monash University politics lecturer Zareh Ghazarian said.

“The instability of the Liberal Party makes this moment so very dangerous for their chances for the next election,” he said.

Deeming launched the legal action in December 2023, claiming Pesutto defamed her by suggesting or implying she was a Nazi or Nazi sympathiser following the Let Women Speak rally.

The March 2023 event was attended by men in black who performed the Nazi salute on the steps of state parliament.

O’Callaghan found Pesutto defamed Deeming in a media release, two radio interviews, a press conference and in a party expulsion motion following the rally.

Pesutto implied she was unfit to be in the parliamentary Liberal Party because she was associated with Nazis.

His defences of public interest, honest opinion and qualified privilege were also found to have failed.

Pesutton said his lawyers would review the judgment before deciding whether to appeal.

-AAP