CANBERRA (Reuters/AFP) - Australian Prime Minister Tony Abbott on Monday dropped a signature plan for paid parental leave and promised a more consultative approach on economic and security problems, seeking to stave off mounting criticism of his leadership.

In a key speech to the National Press Club in Canberra on Monday, dubbed by some commentators as the most important of his political career, Mr Abbott outlined his priorities including job creation, helping families, building roads and strengthening national security.

He said he had not considered stepping down. "This will be a test of character," Mr Abbott said in response to a question about his leadership.

"Politicians pass the test when they do what is best for the long-term, not when they give in to short-term fear and make a difficult situation worse."

Mr Abbott's tough stance on asylum seekers, his pressure on Russia over the downing of a Malaysian Airlines jet in Ukraine and success on trade deals have won approval but been over-shadowed by anger over proposed cuts to health, education and other services.

Mr Abbott said he believed he had the full support of his deputy party leader, Foreign Minister Julie Bishop, who along with former Liberal Party leader Malcolm Turnbull, has been touted as a potential replacement.

Standing defiant on calls for him to resign, Mr Abbott said in response to a question that he was the best person to lead the government, and he has not considered resigning.

Acknowledging the higher popularity of Ms Julie Bishop and Mr Turnbull, he said: "Leadership is about making the right decisions for our country's future. It isn't a popularity contest."

In an effort to shore up support from both his party and the public, Mr Abbott announced he was scrapping his A$5.5 billion (S$5.7 billion) paid parental-leave scheme, a plan that had been criticised for being too expensive and made without consultation with colleagues.

He said he took responsibility for his decisions. "I accept that the paid parental leave scheme was a captain's call," Mr Abbott said. "I accept that the restoration of Knighthoods was a captain's call. They are the two captain's calls which I have made but I have listened, I have learned and I have acted."

"Values and beliefs are important but the most important consideration of all is what will best help families at this time," said the Prime Minister. "I know that many women in many families are working just to pay the childcare - because that was the Abbott family's experience when Margie first went back to work after becoming a mother."

But he did not elaborate on what would happen next, simply saying that he would have wide consultations.

The parental leave policy, championed by Mr Abbott since before he won office in September 2013, had been intended to provide new mothers who earn as much as A$100,000 (S$104,828) a year full pay for six months.

In response to another question, he reminded people that he made the right calls on issues like the MH17 crash: "I never came into politics to be popular. And anyone who does come into politics to be popular will either be a very bad politician or a very disappointed politician. I came into politics to make a difference."

Other notable things he said were a pledge to maintain the Goods and Services Tax (GST) base and rate, and that his government would focus on jobs and families in new policies designed to promote "more opportunity for all".

On the GST, his promise came with a caveat - he said only political consensus (i.e. if it's supported by Labor opposition leader Bill Shorten and other Labor leaders, and all states and territories) would change it. That means the GST base and the rate is unlikely to change this term or the next.

He also announced a company tax cut for small businesses to take effect on July 1 - "at least as big as the 1.5% already flagged".

On the White Paper consultation process, he said: "Both white paper processes will be open and constructive: stakeholders will be consulted, submissions will be published; any hearings will be open, and the states will have senior representatives on steering committees.

"Everyone who wants a say will have one - and the people will have the last word at the ballot box."

Answering a question on the controversial knighthood programme and that knighting of Britain's Prince Philip, Mr Abbott suggested that he still had the confidence of the party room, adding that all awards in the order of Australia will henceforth be a matter for the order of Australia Council.

But when asked whether he would take a knighthood if offered it, he said: "No."

Acknowledging his difficulties, he dared his colleagues: "I like my colleagues, I respect my colleagues, I trust my colleagues above all else, to want to do the right thing by themselves, by our party, by the government and by the country and the last thing any of them would want to do is to make a difficult situation worse."

And admitting to his broken campaign promises, he said: "I accept that there are some commitments that we gave in the campaign that we have not been able to keep. But I also say - and I think the public understands this - that the situation that we thought we were facing at the time of the election turned out to be different."

Mr Abbott started off his speech by thanking Egyptian President Abdel Fattah al-Sisi and Ms Bishop for journalist Peter Greste's release from jail.

He then latched on to the topic of national security and the Islamic State in Iraq and Syria (ISIS): "In these troubled times, people expect more from their government, not less, and we must deliver for them."

Continuing on the theme of terrorism, he said: "People are sick of Australian citizens - including people born and bred here - making excuses for Islamist fanatics in the Middle East and their imitators here in Australia.

"It's not good enough just to boost the police and security agencies, which we've done - by restoring the millions ripped out by Labor - and to improve data retention, which we're doing.

He pledged to ramp up national security laws if neccessary: "If cracking down on Hizb-ut-Tahrir and others who nurture extremism in our suburbs means further legislation, we will bring it on and I will demand that the Labor Party call it for Australia. The police and the security agencies have told me that they need access to telecommunications data to deal with a range of crime, from child abuse to terrorism, and - as far as I am concerned - they should always have the laws, money and support they need to keep Australia safe."

On the economy, he continued: "As Liberals and Nationals, sound economic management is in our DNA... This government would hardly have taken the political risks it has without the conviction that some change is absolutely unavoidable if our country is to flourish.

"During 2015, our priority will be creating more jobs; easing the pressure on families; building roads; strengthening national security; and promoting more opportunity for all - with a new families policy and a new small business and jobs policy."

Speaking about Labor's record, he said Australia was envied by the world under former PM John Howard: "After six years of Labor, the deficit had blown out to A$50 billion and gross debt was skyrocketing towards A$667 billion.

"Under Labor, government was spending too much; borrowing too much; and paying out too much dead money in interest alone."

He also said he would tighten foreign investment laws, pledging "better scrutiny and reporting of foreign purchases of agricultural land and better enforcement of the rules against foreign purchases of existing homes so that young people are not priced out of the market".

"These laws were not legally enforced by the former Labor government - not once."

Mr Abbott also reminded the nation of his government's scrapping of the carbon tax, and rebuffing of the waves of asylum seekers: "The Abbott government has stopped the boats - and only this government will keep them stopped. The Abbott government has scrapped the carbon tax - and only this government will keep it scrapped."

Dr Haydon Manning, an associate professor at Flinders University's school of social and policy studies, said Mr Abbott's Cabinet colleagues were unlikely to seek to replace him for now.

"You feel that he will be given through until about mid-year, through the budget process, the selling of the budget, then the litmus test of what the public and party polling are saying," Dr Manning said. "If it's then clear that Australians have tuned out from this prime minister, then you'd think he would be removed."

Mr Abbott, 16 months into the top job, has faced a series of challenges including an economy battered by a plunge in commodity prices as well as broken election promises, policy back flips and perceived gaffes.

Pressure on him soared after last week's decision to award a top honour to Britain's Prince Philip, Queen Elizabeth's husband.

More questions about his leadership were raised after a disastrous state election on the weekend, when the Queensland Liberal-National Party (LNP), closely aligned with Mr Abbott's Liberal-National coalition, surrendered the largest political majority in Australia's history after just one term in office, in an embarrassing result for the LNP.

Members of the government called the result "catastrophic", sparking speculation of a possible party revolt against Mr Abbott's leadership.

Mr Abbott had said he was determined to stay on as leader, adding government was "not a popularity contest", but conceded last Saturday's rout of the LNP in the Queensland election had delivered a jolt.

"The people of Australia elected me as prime minister and they elected my government to get on with the job of governing our country," he told reporters in Sydney.

"I accept that we've had some difficulties," Mr Abbott said. "I accept that we need to learn from the difficulties that we've had, but in the end, government is not a popularity contest, it is a competence contest."

Local media reported that Mr Abbott has called a two-day meeting of his Cabinet from Tuesday to thrash out a policy agenda for 2015 and confront the political issues dogging his government.

Fairfax media reported backbenchers and ministers have been expressing growing doubts over Mr Abbott's leadership in recent weeks, however the majority of the dissatisfaction has been kept behind closed doors or through background briefings to the media.

Attorney-General George Brandis told Sky News the Cabinet "was determinedly, unitedly and strongly behind the prime minister".

Mr Abbott had been criticised for broken electoral promises and a series of policy backflips.

That pressure intensified last week when even his biggest supporters, including Australian-born media baron Rupert Murdoch, publicly criticised his contentious and unpopular decision to award Britain's Prince Philip a knighthood.

Mr Abbott's surprise reintroduction of knights and dames in the honours system last year drew criticism that he was out of touch with national sentiment.

A new poll out on Monday showed approval for Mr Abbott's performance had plumbed fresh lows at 29 per cent, versus 67 per cent disapproval.

Less than a third of those surveyed expected Mr Abbott to lead into the next election, due in about 18 months.