Mr Alex Turnbull, son of Australia's former prime minister Malcolm Turnbull, has made an unusual intervention in a crucial by-election to be held today.

Mr Turnbull, an investment manager who lives in Singapore with his wife and young children, has been urging voters to abandon his father's Liberal Party, saying it has been hijacked by "extremists".

He said the party included a number of "crazies" who were forcing it to adopt irrational positions, such as opposing action to combat climate change. "A lot of (my dad's) legacy is fighting the good fight against the crazies," he told ABC News on Wednesday.

Commenting on Mr Scott Morrison, who replaced his father as Prime Minister after a bitter internal party battle, Mr Turnbull said: "(Mr Morrison) has got the same problem my dad had.

"He's got some very, very crazy people to deal with who are not particularly rational political actors."

His expression of public anger at his father's party is significant, particularly as the by-election could determine the fate of the ruling Liberal-National coalition, which rules with a narrow one-seat majority.

The by-election is being held in the Sydney seat of Wentworth to replace former prime minister Turnbull, who resigned from Parliament after being ousted by his party.

The seat has been held by only the Liberal Party, or its conservative predecessors, since Australia became an independent nation 117 years ago.

If the Liberal Party loses, it will surrender its majority but will likely be able to rely on the support of cross-bench MPs to avoid a no-confidence vote. But a loss in such a reliably conservative seat would place heavy pressure on Mr Morrison ahead of a general election, due early next year.

There are fears of a voter backlash in the area, where Mr Turnbull was popular. At the last election, he defeated his Labor opponent by 68 per cent to 32 per cent.

Opinion surveys suggest that Liberal candidate Dave Sharma, a former ambassador to Israel, is in serious danger of losing to his main rival Kerryn Phelps, a prominent doctor and an independent.

An internal party poll, leaked this week to The Australian, found that Dr Phelps was on track to win with a lead of 55 per cent to 45 per cent.

Mr Sharma has campaigned well, but faces several hurdles. Ruling parties tend to face a backlash at by-elections from voters who want to send a message of protest to the government.

There is a strong risk of such a protest in the by-election because Mr Turnbull was popular locally and is perceived to have been treated unfairly by his party.

In addition, Dr Phelps may be a palatable choice for traditional Liberal voters who do not want to vote for the opposition Labor Party.

She is both Jewish and a prominent gay rights campaigner in a seat which has large Jewish and gay communities.

Not surprisingly, it has been a hard-fought contest.

Mr Morrison was widely condemned for announcing this week that he would consider following United States President Donald Trump's move to relocate the Australian embassy in Israel from Tel Aviv to Jerusalem.

The announcement, seen as a brazen move to try to win the Jewish vote in Wentworth, led to an immediate backlash from Indonesia.

Indonesian Foreign Minister Retno Marsudi reportedly warned her Australian counterpart Marise Payne that the move would damage ties between the two neighbours and "slap Indonesia's face".

Mr Malcolm Turnbull, who is overseas, has pointedly stayed away from campaigning.

He endorsed Mr Sharma weeks ago but then kept quiet. He will reportedly visit his son in Singapore after the election before returning to Australia.

Mr Morrison yesterday appeared to be bracing himself for a likely loss, saying he was prepared to govern without a parliamentary majority.

"As Prime Minister, you have got to deal with things that come your way from out of the blue every single day; that is the job," he said.

"My message to those who voted Liberal at the last election (is): Don't risk a hung Parliament, don't risk unnecessary uncertainty."

Political commentator Michelle Grattan said a Liberal loss would be a "devastating blow for the Prime Minister".

"A loss wouldn't mean the fall of the Morrison government," she wrote on The Conversation website yesterday.

"But it would make its operations harder, unsettle the backbench, likely add to the turmoil in the Nationals and further strengthen (Labor leader) Bill Shorten's already very good prospects."