The question on the lips of NSW Liberal MPs and powerbrokers is whether Dominic Perrottet's leadership can survive his admission that he dressed as a Nazi at his 21st birthday party.
An anonymous Liberals "gossip" account on Twitter flagged the controversy on January 2 when it said party officials were scrambling to verify the existence of a "seriously damaging photo".
By the end of last week, Liberal MPs were being told a photo existed which had racist overtones, and on Thursday the 40-year-old Perrottet admitted to the media he had worn a Nazi uniform 19 years earlier.
Perrottet apologised profusely to the Jewish community and war veterans.
His admission will be a hit to new Liberal candidate Kellie Sloane, a former TV journalist replacing Gabrielle Upton in the seat of Vaucluse, where 20 per cent of the population is Jewish.
The Premier revealed a cabinet colleague had raised the matter with him two days earlier and he had decided to come clean about the "terrible mistake", though he denied knowledge of an incriminating photo.
The "Lib goss" Twitter account posted on Thursday that other Liberals, including some now in federal Parliament, were in the Nazi photo "all together happy & jovial" at the party.
Liberal sources speculated the matter had been brought to a head by members of Perrottet's own hard right faction pressuring him over preselections and the Premier had opted to get out in front of the story.
Liberal phones were running hot as the news broke, and the main conversation topic was whether Perrottet will face a leadership contest.
The man by his side during Thursday's media conference, moderate-faction leader and Deputy Premier Matt Kean, is the most obviously electable alternative.
No one from Perrottet's faction appears to have the public profile to beat a resurgent Labor at the March 25 election.
The party room may have to decide whether changing horses at the start of what will be a difficult campaign is better than sticking with a leader who has just admitted to a serious lack of judgment.
