Punters believe it is more likely than not Prime Minister Tony Abbott will face a leadership ballot before the next election.
Online bookmaker sportsbet.com.au says Mr Abbott is now odds on to face a challenge this term, with odds that his leadership will be tested shortening from $4 on December 2 to $1.65 on January 29. The odds of no challenge to Mr Abbott's leadership before the election have drifted from $1.20 in December to $2.15.
Sportsbet.com.au spokesman Will Byrne said Mr Abbott's decision to award a knighthood to Prince Philip on Australia Day appeared to be a "tipping point" for punters.
"Since then, we've definitely seen more money placed on say, Julie Bishop to be the next leader after Abbott," Mr Byrne said.
"In medieval times knights where appointed with a tap on the shoulders with a blade but that Prince Philip decision by Abbott could ironically see him fall on his own sword."
Mr Byrne said 98 per cent of the money being wagered on whether Mr Abbott would face a challenge was being bet on his leadership being tested.
Foreign Affairs Minister Julie Bishop is the punters' favourite to replace Mr Abbott as Liberal leader, with the odds of her succeeding him shortening from $2.20 in December to the current $2.10. The next most likely replacement for Mr Abbott is Communications Minister Malcolm Turnbull, whose odds have firmed from $3.50 to $3.
The odds of the Coalition winning the next election have drifted from $1.17 in September 2013 to $1.70, while Labor's odds have shortened from $4.50 to $2.05 over the same period.
"That's incredibly close," Mr Byrne said.
A Seven News ReachTEL poll taken on Tuesday night found more than 70 per cent of respondents opposed Mr Abbott's decision to award Prince Philip the nation's highest honour by making him a Knight of the Order of Australia.
The poll found only one in five respondents think Mr Abbott is doing a good job as Prime Minister while six out of 10 rated his performance as poor.
Mr Turnbull was the most popular choice to lead the Coalition, with more than 44.6 per cent of respondents backing him compared with 30.5 per cent for Ms Bishop. Just 18.1 per cent of respondents nominated Mr Abbott as the best person to lead the Coalition.
Conservative commentator Andrew Bolt on Thursday branded Mr Abbott's decision to honour Prince Philip "pathetically stupid" and potentially fatal for his leadership.
Speaking on Sydney radio station 2GB on Wednesday night, Bolt said the decision to honour Prince Philip on Australia Day was "friendless" and one that made Mr Abbott's own allies look stupid if they tried to defend it.
"This is just such a pathetically stupid ... gosh, I didn't mean to be that strong because I actually like Tony Abbott very much. But this is just such a very, very, very stupid decision, so damaging that it could be fatal," Bolt said.
Bolt's blistering intervention follows a plea by media baron Rupert Murdoch for Mr Abbott to sack his top aide Peta Credlin, who has been criticised internally for being too controlling.
Finance Minister Mathias Cormann on Thursday dismissed suggestions Mr Abbott's leadership was under threat, while Health Minister Sussan Ley said Ms Credlin was a "terrific asset".
