Was Bob Day's election legitimate and what happens now?

The senate make-up has been thrown into chaos with a possible High Court challenge over the legitimacy of Family First Senator Bob Day's position in the Upper House. It could mean a recount of South Australian senate votes and no guarantee his replacement will be from the same political party.

Former Family First Senator Bob Day. Source: AAP

Senator Bob Day resigned yesterday, with immediate effect.

The federal opposition is now urging the government to admit when it first learned Senator Day may have been indirectly profiting from the Commonwealth.

It followed reports the High Court may consider whether Senator Day was validly elected to the Senate in July, amid concerns he may have breached the constitution.

Breach of constitution?

It's believed the government was renting an electorate office for Senator Day in a building with which he had financial links.

If proven, that could render him ineligible to stand as a member of the parliament.

Under Section 44 of the Constitution, anyone who has a direct or indirect pecuniary interest in any agreement with the Commonwealth is incapable of being chosen or sitting as a senator or MP.

'When did they know the facts?'

Labor's Legal Affairs spokesman, Mark Dreyfus, said the government had some explaining to do.

"When did they first know the facts? That's the question," he said.

"When did they know this electoral office, which Senator Day's been in for a long time, was a building in which, as is apparently alleged, he had a direct or indirect pecuniary interest? That's the question.

"If it's months ago, why didn't they investigate before now? Is this the matter that the now-resigned Solicitor-General Justin Gleeson disclosed he had advised on, namely a question to do with the composition of the senate, which we learned last month in a senate committee inquiry hearing?"

Court challenge raises government uncertainty

The government now faces fresh uncertainty in the senate as it enters its final sitting weeks of the year.

It has relied on Mr Day's support for a number of key pieces of legislation.

But Bob Day's replacement might not be known for several weeks.

If the High Court finds he was qualified to be a candidate and there was no conflict, Mr Day's resignation will stand and Family First may be able to appoint his replacement.

However, if it rules Mr Day was not duly elected, it will likely force a recount of the South Australian senate vote to decide who will replace him.

Who gets the vacant seat?

This could mean a member from Labor or One Nation may get the job.

Either way, Veterans Affairs Minister, Dan Tehan, told the ABC the government would push the senate to take the matter to the High Court.

"The potential referral to the High Court relates to Section 44 of the Constitution regarding a potential, indirect pecuniary interest in a contract with the Commonwealth," he said.

Constitutional lawyer George Williams said the High Court was expected to treat the case with urgency.

"In a case like this, you would normally expect the High Court to act as quickly as possible as it does with elections and other matters of political sensitivity because obviously one vote in the senate at the moment could make a big difference," he told the ABC.

Government to push on with legislation

Federal Finance Minister, Mathias Cormann said despite uncertainty over the numbers, the government would push on with its key legislation in the parliament.

"We'll continue to work with all senators from across the political divide in relation to these measures explaining why, for example, the restoration of the ABCC is so important to our future economic success," he told the ABC.

Senator Day announced last month he would quit the senate to deal with the collapse of his national building company, which put a halt on construction of new homes around the country.

But then last week, Senator Day indicated he might stay on and serve the final sitting weeks of the year, if an investor could revive his housing group.

Now, Senator Day has denied any wrongdoing and said his formal and sudden resignation is due to the investor pulling out.

Federal Opposition Leader Bill Shorten weighed in on the latest developments on social media.

"Not as worried about Bob Day's future as I am about the hundreds of families and contractors who've been ripped off by his companies," he wrote.

- with AAP