Australia's government - which is clinging to power by a single seat - has been plunged into crisis after a court disqualified the deputy prime minister from parliament, ending its parliamentary majority.
If the court rules that he was illegally elected in July past year due to New Zealand citizenship he unknowingly inherited from his father, the ruling coalition could lose its single-seat majority in the House of Representatives, where governments are formed.
Turnbull says this is "clearly not the outcome" the government was looking for.
Turnbull confirmed that a by-election would be held in Joyce's seat on December 2.
Mr. Joyce will be able to stand for re-election, however, having renounced his New Zealand citizenship since the last election. A no-confidence vote would require all independent and crossbench lawmakers to turn against the government.
It tumbled to a 0.8 per cent loss after the court disqualified Deputy Prime Minister Barnaby Joyce, forcing a by-election, but it bounced to close down 13.1 points, or 0.22 per cent, at 5903.2.
The Constitution prohibits dual nationals from being elected to office.
It's an archaic law, especially now that a quarter of Australia's population was born overseas and another quarter have parents who were born overseas.
Waters and Ludlam, both senators for the Green Party, resigned earlier this year after they became aware of the citizenship issue. The senator had already renounced his New Zealand citizenship before the election, but the case led to politicians and the media accusing other lawmakers of violating the constitution.
He said Matt Canavan would be restored to the cabinet immediately.
The disqualified senators included government minister Fiona Nash, Joyce's deputy in the Nationals party, who inherited British citizenship from her Scottish father.
Joyce told lawmakers in August he had discovered he was a New Zealand citizen, throwing his position in parliament into jeopardy.