Nine newspapers report the Victorian Liberals are planning to preference One Nation ahead of Labor as a default position for November's state election, unless there is a "particularly odious candidate" or other exceptional circumstances.
But the office of Victorian Liberal leader Jess Wilson, a member of the party's state campaign strategy committee, categorically denied the preference strategy had been discussed.
"This story is false," a spokesman for the state opposition leader said.
"The state campaign strategy committee has not once discussed One Nation preferences for the state election.
"No decision, in-principle or otherwise, has been made about preferencing any party."
Former prime minister John Howard once famously said One Nation should be placed last on every Liberal Party how-to-vote card around Australia.
Mr Howard has since tempered his 2001 edict, declaring preferences with One Nation should be considered on a case-by-case and seat-by-seat basis.
Ms Wilson previously ruled out forming an "alliance" with One Nation for the state election, with polling showing one-fifth of Victorian voters back Pauline Hanson's populist party.
But the state Liberals have preferenced One Nation's Darren Hercus ahead of community independent candidate Tracee Hutchison for Saturday's Nepean by-election.
Liberal candidate and Mornington Peninsula shire mayor Anthony Marsh has a fight on his hands to retain the state seat in a three-way contest triggered by the sudden resignation of Sam Groth.
The same preference strategy has been adopted federally for the Farrer by-election on May 9, with the Liberals favouring One Nation's David Farley over community independent candidate Michelle Milthorpe.
Federal Opposition Leader Angus Taylor has defended One Nation as the "least worst option", apart from Nationals pick Brad Robertson.
"We've got ... a group of teals in this parliament that are trashing our energy system, are ready and have been trashing access to water and the strength of our agricultural communities," he told ABC's Insiders program on Sunday.
"And we simply cannot endorse that."
Ms Milthorpe, a teacher and advocate for child sexual assault survivors, rejects the "teal" label but her campaign has the backing of Climate 200, the political funding body founded by Simon Holmes a Court.
Mr Taylor singled out Iran as a "bad country" while selling his immigration policy, forcing party deputy and prominent moderate Jane Hume to clarify the country would not be subject to a blanket ban.
Mr Taylor also criticised the booing of the Indigenous acknowledgement of Country at Anzac Day services but argued Welcome to Country ceremonies, a different cultural practice, had become "devalued by overuse".
Defence Industry Minister Pat Conroy accused Mr Taylor of "trying to be all things to all people".
"He's just a pale imitation of One Nation at the moment," he told ABC News on Monday morning.
Deputy Prime Minister Richard Marles said Australians would judge the Liberals on how they ordered their preferences.
22°C