Deputy leader Sussan Ley confirmed her candidacy on Friday morning, and was soon followed by shadow treasurer Angus Taylor.
"Many Australians, including women and younger Australians, feel neglected by the Liberal Party," Ms Ley said in a statement.
"We must rebuild trust with all sections of Australian society.
"My election as leader of the Liberal Party would send a very strong signal that we understand things need to be done differently."
Ms Ley has the support of the party's moderates, with some believing a woman at the helm will help repair the party's negative image among female voters.
After much speculation, Mr Taylor also announced his candidacy for the leadership, promising to rebuild the party around its core values such as sound economic management and aspiration.
"I will provide leadership that unites our party, that puts our cause above sectional interests and that reaches beyond our base and earns the trust of the voters that we've lost," he said in a statement.
Frontbencher Dan Tehan, who holds the rural seat of Wannon in Victoria's west, ruled himself out of the Liberal leadership race.
The leadership battle threatens to blow apart the coalition following the high-profile defection of Senator Jacinta Nampijinpa Price, who has jumped ship from the Nationals to the Liberals.Â
She is expected to run as Mr Taylor's deputy.
Senator Nampijinpa Price said she did not made the decision lightly and wants to help rebuild the Liberal Party after its worst loss in history.
Senior Nationals are furious, accusing the Northern Territory senator of lacking loyalty and putting her ambitions above the party.
Nationals senator Bridget McKenzie directed her anger at the Liberals, accusing them of actively recruiting Senator Nampijinpa Price.
"That is not the behaviour of trusted partners," she told Sky News.
Former prime minister Tony Abbott supported the move, with Senator Nampijinpa Price saying "extraordinary times call for extraordinary measures" after hitting the phones to test the waters.
But some in the Liberals are also angered by the move, worried the senator could help drag the party further to the right.
Senator Nampijinpa Price gained a national profile after becoming a leading 'no' campaigner in the Indigenous voice referendum.
She urged supporters to "make Australia great again" during the election campaign, echoing Donald Trump's slogan just as the Liberals were trying to distance themselves from the US president.
Senator Nampijinpa Price has previously called for abortion to be made a federal issue, drawing a swift rebuke.
She entered parliament in 2022 and faces election every three years.
Critics warn switching parties could harm Senator Nampijinpa Price's pre-selection chances in 2028.
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