The MP from Sydney’s south told Coalition MPs that he would leave the party but would guarantee supply and confidence to the Morrison government.
The MP has been an outspoken and sometimes troublesome member of the Liberal Party, espousing views that contradict the government’s views on coronavirus treatment, including the vaccine.
He will make a statement to the House of Representatives soon.
Mr Kelly’s departure from the party leaves the Morrison government with just a one-seat majority.
But Mr Kelly’s guarantee of supply and confidence will keep the Coalition in power even if they lose another member.
Days ago a poll was released showing his electorate did not approve of Mr Kelly’s views on coronavirus and climate change.
The uComms poll showed just 24 percent of voters thought his support of unproven coronavirus treatments were responsible.
Thirty-one percent thought his Facebook posts on climate change were responsible.
Mr Kelly has long argued the global climate is getting cooler, not hotter.
Mr Kelly represents the seat of Hughes, which takes in Sydney suburbs like Sutherland, Menai, Sylvania and Heathcote.