Cory Bernardi is deregistering his political party the Australian Conservatives, adding to speculation the South Australian senator could deliver Scott Morrison an extra vote by returning to the Liberal fold.
Senator Bernardi is still pondering his future and says it depends on how he can play an effective role in parliament.
"There's some unfinished business I'd like to resolve," he told 2GB radio on Thursday.
But the senator says he is yet to speak with the prime minister, who is holidaying in Fiji with his family.
Senator Bernardi this week said he was open to the idea of returning to the Liberal party, which he left in February 2017 to begin his own.
But the South Australian said he was "disappointed" by the party's performance at the May 18 federal election, with his supporters flocking back to the Liberals since Mr Morrison took the top job.
"The inescapable conclusion from our lack of political success, our financial position and the re-election of a Morrison-led government is that the rationale for the creation of the Australian Conservatives is no longer valid," he said in a statement on Thursday.
"We can make all the excuses in the world for the result but it is clear that many of our potential voters returned to supporting the coalition when Malcolm Turnbull was replaced by Scott Morrison."
Senator Bernardi said his supporters "breathed a sigh of relief" when Mr Morrison became prime minister.
"Malcolm Turnbull was leading a Labor-lite coalition into political oblivion," he said.
"As they abandoned their supporter base in pursuit of green-left policies, major party politics became an echo chamber rather than a battle of ideas."
He has credited Mr Morrison - a "man of faith and values" - for returning the party back to its traditional policies, while being heartened the government said immigration and taxes were too high.
Senator Bernardi said his "steady and sensible" approach during the election campaign didn't gain traction, but that he did not want to gain attention for deliberately courting controversy.
"Some solace can be found in the fact we never compromised on our principles in pursuit of political sugar hits," he said.
Labor is meanwhile wondering what Senator Bernardi's decision says about the government.
"Cory Bernardi confirms the Liberals are now an extreme right wing outfit," Labor MP Brian Mitchell tweeted.
Senator Bernardi cleared his Twitter feed on Thursday and published a lengthy statement to the party's website.
A fortnight ago the party said it was moving offices before the end of the month, promoting a 50-per cent-off sale on merchandise.
Mr Morrison will have a guaranteed 36 votes in the upper house if Senator Bernardi rejoins the Liberals, meaning he will only need the support of three crossbenchers to pass legislation.
The Australian Conservatives' remaining resources will be used to finalise its existing financial obligations before June 30.