A key confidant of Prime Minister Scott Morrison offered Sutherland Shire councillor Kent Johns a $350,000 party job in an attempt to head off a preselection showdown with sitting Liberal MP Craig Kelly.
Scott Briggs repeatedly called on Cr Johns to drop out of the preselection race for the federal seat of Hughes, adding Mr Kelly would move to the crossbench and "bring down the government" if the challenge proceeded, Nine understands.
Mr Briggs - a Cronulla-Sutherland Sharks board director and a president of the federal electorate conference for Mr Morrison's seat of Cook - made the approaches as early as October.
He suggested a $350,000 job with the Liberals' federal campaign director would be available if Cr Johns pulled out of the preselection contest with Mr Kelly.
The six-month role, Cr Johns was assured, had been approved by the Prime Minister and other key party figures.
Mr Briggs also warned that News Corp and 2GB radio would unleash a campaign to "destroy" him unless he withdrew.
He conceded to Cr Johns and other local party members that Mr Kelly should be rolled but said the backbench MP "holds the power" due to the Morrison government being in minority.
Mr Morrison later claimed in Parliament on December 3 that Mr Kelly had "never" threatened to go to the crossbench.
Mr Briggs made numerous attempts over several weeks to convince Cr Johns, ultimately begging him to drop out for the unity and survival of the Morrison government. Cr Johns rejected the offers put to him.
The Prime Minister then forced through a special ballot endorsing all sitting NSW members, which members of the Liberal state executive reluctantly supported.
Mr Morrison and his lieutenants exerted significant pressure on the state executive to endorse Mr Kelly.
The Prime Minister personally called Waverley councillor Sally Betts, a state executive member, from Easter Island while flying home from the G20 in Argentina.
Mr Briggs also called several state executive members to ensure they voted in line.
The preselection showdown - which had been simmering for months - boiled over in the final parliamentary sitting fortnight of the year when Mr Kelly made threats to cross the floor if he was not preselected.
The revelations show how desperate the closest confidants of Mr Morrison were to avoid Mr Kelly defecting, despite the Prime Minister saying publicly that he was "never considering" the prospect of Mr Kelly jumping ship.
Mr Briggs did not respond to calls seeking comment. A spokesman for Mr Morrison referred questions to the Liberal Party's federal director Andrew Hirst.
A federal party spokesman said: "With both a federal and state elections taking place in NSW in the first six months of next year, the party will be adding experienced campaigners to our team to ensure the people of NSW don't face the double whammy of Labor at the state and federal level plus Bill Shorten's $200 billion in higher taxes."
Cr Johns declined to comment but referred to a previous statement on Twitter in which he said he was "disappointed" with the outcome but respected the party's decision.
Cr Johns easily had the numbers to oust Mr Kelly as the Liberal candidate in Hughes.