Victorian Liberal leader John Pesutto has vowed to fight any challenge after MPs said his position had become untenable following a judge’s ruling that he defamed a former colleague as a Nazi sympathiser and ordered him to pay her $300,000 in damages.

The judgment in the long-running defamation case launched by former Liberal MP Moira Deeming threw the state opposition back into turmoil on Thursday, with internal opponents saying a challenge was almost inevitable if Mr Pesutto did not choose to step down.