Sussan Ley has resigned from the frontbench amid an ongoing expenses scandal, despite claiming she has not broken any rules.

Key points: New independent body overseeing parliamentary expenses will be created

New independent body overseeing parliamentary expenses will be created Arthur Sinodinos to stay on as Acting Health Minister until Ms Ley's replacements announced

Arthur Sinodinos to stay on as Acting Health Minister until Ms Ley's replacements announced Ms Ley maintains she has followed rules, but admits she may have failed political "pub test"

Prime Minister Malcolm Turnbull said Ms Ley's replacements in the health, aged care and sport portfolios would be announced next week and Arthur Sinodinos would stay on as Acting Health Minister until then.

"Australians are entitled to expect that politicians spend taxpayers' money carefully, ensuring at all times that their work expenditure represents an efficient, effective and ethical use of public resources," he said.

"We should be, as politicians, backbenchers and ministers, we should be as careful and as accountable with taxpayers' money as we possibly can be."

Ms Ley stepped aside from Cabinet on Monday, amid two investigations into her travel expenses, which included billing taxpayers to attend two New Year's Eve events hosted by a prominent Queensland businesswoman and donor.

Ms Ley was also criticised for purchasing a $795,000 luxury apartment on the Gold Coast while on a taxpayer funded trip, claiming it was an impulse purchase.

But a retired couple on the Gold Coast Hinterland claim Ms Ley made an unsuccessful bid on her house nine months before she purchased the apartment.

New body to oversee expenses

Mr Turnbull has also announced a new compliance body to oversee parliamentary expenses, based on a similar system in the United Kingdom.

"The Government believes that the work expenses of parliamentarians, including ministers, should be administered and overseen by an independent agency," he said.

It will monitor and adjudicate all claims by MPs, senators and ministers, ensuring that taxpayers' funds are spent appropriately and in compliance with the rules."

Describing transparency as key, Mr Turnbull said the new system would allow the public to view expenses in "as close to real time" as possible.

The body will be governed by an independent board including an experienced auditor, someone with experience in remuneration matters, a former judicial officer and a former MP.

The creation of the body will be overseen by Special Minister of State, Scott Ryan, and Mr Turnbull has directed his department to provide urgent attention.

"Australians are entitled to expect that politicians spend taxpayers' money carefully, ensuring at all times that their work expenditure represents an efficient, effective and ethical use of public resources," Mr Turnbull said.

The UK introduced changes to expense reporting in 2009 after a long-running expenses scandal, establishing the Independent Parliamentary Standards Authority.

"We're not slavishly bound to the United Kingdom model, I might add, but that is the very clear direction that we are focused on," Mr Turnbull said.

Acting Opposition Leader Penny Wong said Labor had given in-principle support for the changes, but criticised the Government for the delayed response to the scandal involving Ms Ley.

Sorry, this video has expired Wong says Ley should have resigned 'a week ago'

"Sussan Ley's done what she should have done a week ago and she's done what Malcolm Turnbull was too weak to get her to do a week ago," she said.

'I accept community annoyance' with politicians' entitlements: Ley

In a statement, Ms Ley said she was confident she had followed the rules, "not just regarding entitlements but most importantly the ministerial code of conduct".

"The ongoing intense media speculation has made this an incredibly difficult week," she said.

"However I am conscious that it has also been a difficult week for the Government. The ongoing media coverage of politicians' entitlements has been a diversion from the important agenda we all wish to advance at the start of this vital year for our nation and our region.

"Whilst I have attempted at all times to be meticulous with rules and standards, I accept community annoyance, even anger, with politicians' entitlements demands a response."

Sorry, this video has expired Sussan Ley stood aside as a minister earlier this week, saying she had not broken the rules

Ms Ley told reporters on Monday that she was confident the investigations would demonstrate she had not broken any rules, but admitted she may have failed the political "pub test".

Ms Ley was promoted to Cabinet in 2014, 13 years after winning a by-election by 206 votes.

She took over the health portfolio from Peter Dutton and until Friday was one of five women in Cabinet.

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