Former journalist Katelin McInerney comfortably won the NSW south coast seat of Kiama at the weekend, with Labor's two-party preferred vote about 60 per cent.
But Opposition Leader Mark Speakman is "supremely confident" his Liberal leadership will not be challenged.
"There are a lot of armchair commentators. My focus is not on their chatter," he told ABC Radio Sydney on Monday.
The by-election loss was disappointing for the party but not unexpected.
Gareth Ward's 14-year tenure ended in August when he resigned as parliament was preparing to expel him.
His legal bid to remain despite being convicted of sexual and indecent assaults failed.
Ward will be sentenced in the NSW District Court on Friday.
He won the long-time Labor seat for the Liberal Party in 2011, retaining it as an independent in 2023 after being charged.
Liberal candidate Serena Copley garnered 26 per cent of first-preference votes in the by-election.
"Kiama is a special case," Mr Speakman said.
He maintained he was the best person to lead the party.
"I'm not going to be distracted by anonymous gossip," he said.
Premier Chris Minns agreed the circumstances behind the by-election were "pretty unique".
He dismissed Labor inching closer to majority government as any more than "an invitation to work harder".
The Kiama result was followed by disastrous polling for Mr Speakman and his federal counterpart.
Sussan Ley's coalition is number one in only 27 per cent of voters' minds, with Labor Prime Minister Anthony Albanese taking a commanding 58-42 two-party-preferred lead.
The grim figures were echoed in the latest Resolve Political Monitor, which also found one in six NSW voters ranked One Nation highest following national anti-immigration protests and coalition division over migration policy.
The schism led to Ms Ley, the opposition leader, sacking Senator Jacinta Nampijinpa Price from her shadow cabinet.
The Liberals in NSW fared only slightly better than their federal counterparts, with a 28 per cent primary vote in the Resolve poll.
Asked about the party's federal issues on Sunday, Mr Speakman said the "public airing of differences" did not help.
"The Liberal Party has to present itself as united, focused and disciplined, addressing the reality of modern Australia," he said.
Vaucluse MP Kellie Sloane - seen as a future leader of the NSW Liberals - has ruled out a challenge to Mr Speakman.
Former Liberal minister David Elliott said Mr Speakman and the party had an obligation to maintain the status quo, despite poor prospects of success at the 2027 election.
"The ones that are backing in Kellie want Kellie to come in now so that she can be burned at the next state election," Mr Elliott told 2GB Sydney.
"They want (conservative) Monica Tudehope to be the leader after."
NSW parliament resumes on Tuesday, when the Liberal party room will also meet.
