While avoiding the worst-case scenario, the High Court verdict is a disastrous outcome for the Nationals, which has lost its leader and deputy leader, and will lose a seat in the Senate to the Liberals.

Ms Nash, who held a swag of portfolios including rural health and regional development, was declared a British citizen who was ineligible to be elected, ending her 12-year parliamentary career.

The former NSW senator will be replaced on a countback by disability advocate Hollie Hughes - a centre-right Liberal - who was next on the Coalition's Senate ticket in that state at the 2016 election.

Senator Canavan, from Queensland, was immediately returned to his old portfolios of resources and Northern Australia in a hastily-convened ceremony at Government House on Friday afternoon.

Unlike Ms Nash or former deputy prime minister Barnaby Joyce, Senator Canavan quit cabinet while the citizenship case was heard, using his free time to campaign actively against same-sex marriage.

The High Court ordeal has "only strengthened my resolve to fight for those things that will make people's lives better like a secure job, a loving family and a safe Australia", Senator Canavan said.

The disqualification of Ms Nash creates a potential firestorm between the Liberals and their National coalition partners in NSW, with Ms Nash keen to return but Ms Hughes intent on taking the seat.

One source said it was Ms Nash's "lifelong dream" to serve in the ministry, but she was keen to avoid a public spat with the Liberals. Her removal would also harm the gender balance of the cabinet, they noted.

Prime Minister Malcolm Turnbull lavished Ms Nash with praise on Friday, describing her as a "staunch friend" and "very, very good colleague" who was passionately devoted to regional Australia.

He named Ms Hughes as her successor and said Ms Nash was "above all" loyal to the Coalition - comments interpreted by some as an instruction to the Nationals not to challenge Ms Hughes' elevation.

Fairfax Media understands Ms Hughes, country vice-president of the NSW Liberals and a controversial figure in the party, is desperate to take the seat and will not stand aside to allow Ms Nash to return.

"Stampeding horsemen wouldn't be able to convince her from taking up the position," a senior NSW Liberal source said on Friday.

Ms Hughes won a preselection ballot to top the ticket in NSW before the last election, but was forced to give way to sitting minister Concetta Fierrevanti-Wells.

"She would simply need her political head read ... if she were to do that a second time," the party source said.

Another option would be for NSW Nationals senator John "Wacka" Williams to bring forward his retirement, to be replaced by Ms Nash.

Liberals argue the Nationals are in a weak position to assert themselves given their failure to ensure candidates relinquished foreign allegiances. The citizenship net did not entrap any Liberal or Labor MPs.

Senator Canavan was saved largely due to the complexity of Italian citizenship laws, as outlined in a key report authored by two Italian lawyers.

His mother's registration as an Italian overseas voter in 2006, along with Senator Canavan himself, was not deemed to make him an Italian citizen. That required a "separate and more rigorous process", the Italian lawyers advised.

"Senator Canavan has not applied for a declaration of Italian citizenship," the court ultimately ruled. "On the evidence before the court, one cannot be satisfied that Senator Canavan was a citizen of Italy."

His return to the resources portfolio is good news for the controversial Adani coal mine, for which Senator Canavan has been a tireless advocate, including promoting a $1 billion government loan for an accompanying rail line.

When he resigned in July, he said it had been "such an honour to represent the Australian mining sector over the past year". "And I might be back!" he quipped.