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The Australian Electoral Commission has approved the registration of the New Liberals as a political party, despite warnings from the Liberal party it would result in widespread voter confusion.

In a decision published on Thursday, the AEC assistant commissioner, Joanne Reid, found the new partys name was sufficiently distinct and not likely to cause confusion or imply a connection with the Liberal Party of Australia.

The Liberal party had accused the New Liberals of a cynical attempt to piggyback on its brand, and tabled Crosby Textor research claiming up to two-thirds of voters wrongly believed the parties were connected.

The New Liberals registration sets up the nightmare possibility for the Liberal party of a repeat of the 2013 election, when David Leyonhjelm was elected to the Senate from New South Wales. Leyonhjelm recorded a 7.19% swing to him after the Liberal Democrats ticket was placed further to the left on the ballot paper than the Liberal party.

The Liberal party federal director, Andrew Hirst, has told Guardian Australia the party is disappointed with the decision and intends to seek a review of it.

After internal review by a three-person panel in the AEC, the Liberal party can also seek a merits review by the Administrative Appeals Tribunal.

In the decision, Reid said she was not in a position to judge the accuracy of a survey of 2,036 voters conducted by Michael Turner, the head of research at Crosby Textor, as the precise methodology was not specified.

Reid accepted the survey showed some of the participants in the research were confused or mistaken by the name The New Liberals and said she gave this evidence some weight.

Reid said the New Liberals application was much closer to the line than the earlier registration of the Liberal Democrats and Liberals for Forests.

But she found the new party name was sufficiently visually and aurally distinct from the Liberal Party of Australia, as they only shared the word Liberal and in the precedent case of Woollard the AAT had found that no political party can claim the exclusive right to generic words such as liberal.

Reid said the ordinary definition of the word new does have the connotation of representing something different.

Unlike New Labour, a rebranding of Labour in the UK, both the Liberal party and the New Liberals would appear on the same ballot making it very likely that a voter would have a choice between the two, she said.

The word liberal has a broad meaning and history. It is suggestive of a certain political philosophy.

It is not a word that is only associated with one particular party.

Based on the prevalence of the term liberal in politics and in relation to liberal thought, any perceived correlation between The New Liberals might be on the basis of their shared belief in liberalism.

Reid concluded a reasonable person would not think that a connection or relationship exists between the two parties.

The New Liberals was founded in 2019 by the Sydney barrister Victor Kline, who is also a founder and director of the Refugee Law Project. He is also the partys leader and a New South Wales lead Senate candidate.

The New Liberals say they are economically responsible and socially progressive and target the Liberals over failures on climate change and treatment of refugees.

Claiming the mantle of liberalism and providing inner-city voters with a non-Labor alternative to the Liberals has helped independents including Zali Steggall win previously blue-ribbon seats, efforts set to continue at the next election.

In April Kline told Guardian Australia the New Liberals aim to run candidates for the Senate in every state and up to three dozen urban seats held by Liberal MPs, preferencing independents such as the Voice movement first and the Liberals last.

On Thursday Kline said he and the party were absolutely thrilled with the registration decision. Although were not totally secure, our position is very strong, he said, commenting on the Liberal party challenge.

The New Liberals have announced 19 candidates so far, including lead Senate candidates in all states except Western Australia.

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New Liberals registration approved despite Liberal party objection over voter confusion - The Guardian