Denis Napthine (left) will take over from Ted Baillieu, who stepped down as Premier tonight.
SOUTH West Coast MP Denis Napthine has been named the new parliamentary leader of the Victorian Liberal Party after Ted Baillieu's surprise resignation last night.
The decision was first announced following a Liberal-only meeting, just hours after the exit of MP Geoff Shaw, which stirred debate about the future of the Coalition.
Dr Napthine, who yesterday celebrated his 61st birthday, has held the position of Minister for Ports, Racing, Regional Cities and Major Projects since the 2010 election.
The former veterinarian paid tribute to Mr Baillieu when he first addressed the media following the surprise announcement.
"He is an enormous contributor to the Liberal Party and to Victoria," Dr Napthine said.
"I'm enormously proud to have been part of the Baillieu-led team that won the 2010 election.
"Ted Baillieu has certainly served the state very well.
"He can be very, very proud of his achievements.
"I'm honoured and proud to say he's not just a colleague; he is a great friend."
An emotional Mr Baillieu put his support behind Dr Napthine and said it was an honour to have served not just as Premier, but as the Liberals leader of almost seven years.
"I love this state, I love the Liberal Party and I love this role that I have had the honour to enjoy over the last two and a bit years," he said.
"It is apparent to me that a change of leadership is in the best interest of the government.
"I want to put my full support behind the new leader of the parliamentary Liberal Party Denis Napthine and to indicate i will be staying on in parliament to support him.
"Victorians enjoy a legacy I believe is unmatched across the world and it's an honour to stand in this room and understand that over 160 years this party has represented not just a beacon of democracy but also an icon of what's possible.
"The core character of Victorians is one of aspiration and ambition and Victorians have since settlement days, when the first settlers blended with indigenous communities here, demonstrated that core character over and over again.
"It's a character to raise families, to build for the future, to grow businesses and in a very special way it's also about reaching out to the world.
"We have a multicultural base here which I think is unprecedented in the world.
"It's what will ensure Victoria meets the challenges that are ahead."
Dr Napthine is no stranger to the top Liberal position, taking Jeff Kennett's spot after his 1999 election defeat.
He served as Opposition Leader until 2002.
