Costello: I won't be leader

Former federal treasurer Peter Costello has moved to end months of speculation by confirming he has no plans to seek the Liberal leadership and he still wants to retire from politics.

Mr Costello's comments, in an interview published in the Sydney Morning Herald today, are expected to trigger a challenge to Liberal leader Brendan Nelson from current shadow treasurer Malcolm Turnbull.

In the interview Mr Costello says: "I think I've made it clear. I'm not seeking the Liberal Party leadership."

Mr Costello had previously said only that he would not challenge current Liberal leader Brendan Nelson, seeming to leave open the possibility that he could take the job if it was offered to him.

In the latest comments, he also says he has not changed his mind since declaring that he planned to retire from politics in the wake of last year's election defeat.

"I'll continue to serve my constituents and if I get to the point where I feel I'm no longer able to do that as well as I want, I'll make an announcement then. But at the moment I'm very happy serving my constituency. But I'm just a backbencher."

Uncertainty about Mr Costello's future has clouded the leadership of Dr Nelson, who is now widely expected to be challenged by Mr Turnbull.

Liberal frontbencher Tony Abbott has told ABC1's Lateline program that Mr Costello's decision is a great loss to the party.

"I think it's fair to say a lot [of people] will be disappointed because plainly these aren't the greatest days for the federal Liberal Party," he said.

"Peter certainly has the standing and the experience surpassing all the rest of us, so we'll be disappointed not to have him as a comrade in arms.

"I'm disappointed for our country, for our party; most of all I'm disappointed for Peter because I think he will live forever with this haunting sense of what might have been, but he's made his choice."

Mr Abbott says having Mr Costello in Parliament has not made things easy for Dr Nelson.

"Brendan's doing a good job and we've got other talented people, obviously Malcolm Turnbull's a very talented bloke and a real asset to the party," he said.

Mr Costello's memoirs will be launched next week.