Mr Edwards, who has represented Swansea since 2011, was told via email of his expulsion on Friday night.

The party's decision follows allegations at the Independent Commission Against Corruption that Mr Edwards accepted a donation from developer and former Newcastle lord mayor Jeff McCloy.

Mr Edwards gave evidence that he accepted an envelope from a property developer, but refused to resign, saying he "never opened the damn thing".

"It could have been a Bunnings voucher for all I knew," he said last year.

He told ICAC he handed the envelope to Swansea Liberal and campaign member Max Newton.

In a media release issued on Monday, Mr Edwards said: "Please be assured that whilst I may no longer be a member of the Liberal Party, I remain as the member for Swansea in the NSW Parliament."

The MP said he rejected an offer from the party to voluntarily stand down as the endorsed candidate.

"It was the electorate that put me in the NSW Parliament - not a political party - therefore, my allegiance first and foremost was to the electorate, and it was my view that for me to stand aside voluntarily at the request of a political party would have been for me to abandon my obligations to the electorate, and that is something that I was not prepared to do."

In an interview with the Newcastle Herald, Mr Edwards labelled the party's state executive "schoolyard bullies" who used him as a "factional pawn".