Leyonhjelm wins 'Liberal' tag battle

Liberal Democrats senator David Leyonhjelm has finally declared victory over the governing Liberals in the battle over his party's name.

Senator Leyonhjelm told AAP the Liberal party advised him on Sunday it was dropping a legal challenge over the use of the word "Liberal" in his party's name.

"Perhaps they were embarrassed to be seen to stand on the throat of a party that is actually liberal," he said.

The decision ends a long-running dispute between the two parties over the Liberal tag.

Senator Leyonhjelm says the stoush has wasted tens of thousands of dollars in legal fees.

"We were always going to win this case. The so-called Liberal Party is already $18 million in debt. It is telling that the people who run this nation cannot manage their own business," he said.