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According to Liberal sources, party officials have consulted Treasurer Josh Frydenberg, the most senior Victorian Liberal in federal parliament, and he strongly supports suspending Mr Duong from the party.

Victorian senator James Paterson and Victorian MP Tim Wilson - long-standing critics of the Chinese Communist Party - also support the move to suspend Mr Duong.

Senator Paterson said he supported suspending Mr Duong, but all Australians deserve due process and "only the courts can determine guilt or innocence".

"Any party member facing serious charges like these should be suspended until the facts of the case are clearly established," Senator Paterson said.

Mr Duong, also known as Sunny Duong, is suspected to have links with Beijing's overseas influence arm, the United Front Work Department.

The investigation by counter-espionage agency ASIO and the Australian Federal Police at least partly focuses on Mr Duong's alleged activities in trying to influence figures in the Liberal Party's Victorian branch, security sources have confirmed. The evidence won't suggest alleged plans to engage in foreign interference were advanced, but only preparatory.

The AFP alleges Mr Duong has a connection to a foreign intelligence agency, but has not named which country.

Mr Duong has been connected to the Liberal Party since the 1980s and ran as a candidate for the party in the state seat of Richmond in 1996.

While he has been involved with the party for a number of decades, senior Liberals played down his influence, saying he was never a major figure.

Treasurer Josh Frydenberg supports suspending Mr Duong from the party.Credit:Alex Ellinghausen

The 65-year-old had not been returning associates' phone calls in the months leading up to his arrest on Thursday. He was granted bail in the Melbourne Magistrates' Court on Thursday afternoon and will appear for a committal mention hearing on March 11 next year.

Mr Duong had complained to one associate that he had been stopped by authorities when returning from an overseas trip and had his computer and phone searched.

The arrest followed a year-long investigation by the Counter Foreign Interference taskforce, led by ASIO and the AFP. A number of Melbourne properties connected to Mr Duong were raided by the AFP on October 16.

If convicted, Mr Doung faces a maximum 10-year jail term.

He is the first person charged under Australia's foreign interference laws enacted by the Turnbull government in 2018, which criminalised the act of working with a foreign country to influence Australia's democracy.

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Anthony is foreign affairs and national security correspondent for The Sydney Morning Herald and The Age.

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Frydenberg supports suspension of Liberal Party member charged with foreign interference - Sydney Morning Herald