The lifetime gold-pass travel perks for politicians will be abolished immediately, Prime Minister Malcolm Turnbull has announced.
The scheme provided former MPs and senators with 10 free return airfares within Australia each year.
Those elected since 2012 do not qualify for the scheme.
The Government has previewed changes to the scheme in the May budget, although the plan was to phase out the entitlement rather than axe it immediately.
The announcement comes after Mr Turnbull promised an overhaul of parliamentary entitlements and donations following the resignation of former health minister Sussan Ley.
The ABC understands Liberal MP Warren Entsch and another Coalition figure questioned the change during a party-room meeting on Tuesday morning.
Mr Entsch’s main criticism was that the changes were retrospective and unfair to politicians who had served for a long time, and expected they would be able to continue claiming expenses.
The scheme was first introduced in 1918 and originally provided unlimited domestic travel to former MPs.
Since 2002, the size of the scheme has been gradually reduced, which sparked a court case involving four former politicians.
Barry Cunningham, Tony Lamb, John Moore and Barry Cohen lost a High Court challenge to the reductions in the scheme late last year.