Liberal Senator Jacinta Nampijinpa Price says the Coalition must work with One Nation to defeat the government at the next election.
The far-right party has surged in popularity since last year's election, with numerous polls in recent weeks putting it level with Labor as Australia's most popular political party.
Liberal leader Angus Taylor has also come under pressure, with the opposition's popularity remaining at the same low levels seen when Sussan Ley was overthrown in February.
Speaking on Sky News on Wednesday evening, Senator Nampijinpa Price, the Shadow Spokesperson for Small Business, Skills and Training, said the Coalition would have to work with One Nation to win government.
"What I know is that we need to get rid of Labor," she said.
"Angus [Taylor] has made it very clear, as [Liberal Party president] Tony Abbott has made it very clear, that we have to work with One Nation. The aim in all of this is we need to get rid of a dreadful Labor government that is running the country into the ground."
On Thursday morning, Mr Taylor ruled out any plan for the Coalition to carve up target seats with One Nation ahead of the next federal election.
Responding to comments from Liberal MP Tony Pasin, who told The Australian the Liberals should work "hand in glove" with One Nation to target seats either party could win from Labor, Mr Taylor said there was no plan for a non-compete agreement with Pauline Hanson's party.
Mr Taylor, who has previously said he is open to working with any party to remove Labor from government, told the ABC: "No, there's no plan to carve up seats. We won't be doing that."
Prime Minister Anthony Albanese seized on Mr Pasin's remarks, telling reporters in Sydney: "That says it all about the way that the once mainstream Liberal party has become just a fringe party, almost giving up almost two years before an election is held."
Businesses struggling
Elsewhere, Senator Nampijinpa Price said businesses across the country were struggling, in part because of government policies.
"There is absolute uncertainty," she told Sky News.
"Because you never know when this government is going to turn around and lie to the Australian people — to small businesses once more — and introduce yet another tax or another compliance burden that is going to impact small business."
Her comments came after she questioned the Australian Securities and Investments Commission (ASIC) at Senate Estimates over its claim that a rise in small business insolvencies was partly due to some businesses' own "poor financial control".
ASIC Chair and Accountable Authority, Sarah Court, told estimates there were four main contributors to insolvency identified in the regulator's latest statistics: inadequate cash flow or high cash use, "poor strategic management", trading losses, and "poor financial control — including lack of records".
Senator Nampijinpa Price said ASIC's response was "like a victim-blaming exercise".
"The cost of everything that is going up," she said when asked about the main concerns raised by businesses at a roundtable in Melbourne.
"It's the cost of doing business, the increase in inflation, [the] increase in interest rates, the fact that there is weak demand throughout our economy."
