Elliott has told colleagues he will nominate against Kean, but will not run if there are more than two candidates.
Late on Wednesday, the premier announced three ministers will have their portfolios expanded following Ayres resignation.
Elliott, Henskens and Arts Minister Ben Franklin will take on Ayres’ portfolios from Friday.
Perrottet said a further investigation of Ayres’ conduct would be undertaken by the Department of Premier and Cabinet. Asked whether a breach of the minister’s code needed to be referred to the anti-corruption commission, Perrottet said he was the “custodian” of the code so it was appropriate that he launch an investigation.
The premier said he did what he believed to be fair and did not bow to media or political pressure.
“I said from the outset in relation to these matters that I would conduct an inquiry, and that is exactly what I have done. I have [said] at every step of the way through the process that I will not do what is politically expedient, I will do what I believe is proper and right,” he said.
Ayres acknowledged the review had raised questions about whether he breached the ministerial code of conduct.
“In my view, no such breach has occurred. However, I agree it is important that this matter is appropriately investigated and support the premier’s decision to do so,” Ayres said in a statement.
“To maintain the integrity of the cabinet, I have decided to resign as a minister to allow the investigation to be completed… I will continue to serve my community as the passionate Member for Penrith.”
Penrith is the Liberals’ second most at-risk seat, on a margin of just 1.3 per cent.
While the inquiry has focused on Barilaro’s appointment to the New York role, on Wednesday Labor probed whether any other trade commissioners were given special treatment and questioned the process that appointed Stephen Cartwright, the former chief executive of the Business NSW lobby group, to the London -based trade role last year.
Brown said the process was led by NSW Treasury, but she knew Cartwright had been added to the process “late” and after another front-running candidate was deemed unsuitable.
“I got the impression that he [Cartwright] felt he had some sort of an elevated status,” Brown said. “When negotiations got particularly difficult he said ‘I’ll just escalate this to the deputy premier or the premier’.”
In an outcome of the contract negotiations, Cartwright was awarded a cost of living allowance of $112,000, significantly more than the next highest-paid commissioner. Comparatively, Barilaro was awarded $18,000 for living expenses in the US.
Brown told the parliamentary inquiry that she felt Ayres involved himself in the Barilaro recruitment.
“In my view, he was not arm’s length from the process. There were multiple intersection points throughout,” she said on Wednesday.
Ayres is the second minister to be forced from cabinet in a horror week for the Perrottet government after fair trading minister Eleni Petinos was sacked over bullying claims. She has rejected the claims.
NSW Labor leader Chris Minns said the resignation leader of Ayres as a minister and deputy of the Liberal Party was the right decision in the public interest.
Minns said there was now “clear evidence” that Ayres misled the NSW parliament and was involved in the appointment of Barilaro.
He said the saga, which has now dragged on seven weeks, was proving “the cover-up here is probably worse than the crime.”
An Investment NSW spokesman declined to comment on behalf of the agent-general and said it was continuing to assist both inquiries into the Barilaro recruitment.
The Morning Edition newsletter is our guide to the day’s most important and interesting stories, analysis and insights. Sign up here.