After days of speculation the South Australian confirmed his defection to the Senate, from the party he'd been a member of his entire adult life.
"This morning I resigned as a member of the Liberal Party," Senator Bernardi said.
"This has been a very difficult decision for me. Perhaps the most difficult one of my political life. I stand here today, both reluctant and relieved."
Senator Bernardi said politics was failing the Australian people and a better way was needed.
The political class was out of touch he said.
He had warned for many years of the consequences of ignoring voters.
"The level of public disenchantment with the major parties, the lack of confidence in our political process and the concern about the direction of our nation is very, very strong."
"We will be united by the desire to create stronger families," he said of his new Australian Conservatives party.
Former Liberal Senator Cory Bernardi speaks with Mathias Cormann before he announces his resignation from the Liberal Party to the Senate. Photo: Tom Finnigan Source: Tom Finnigan
"To limit the size and scope and reach of government while seeking to rebuild confidence in civil society."
It would give hope to those who despaired at the state of Australian politics, he said, acknowledging the journey ahead would not be for the faint-hearted.
Attorney-General George Brandis said the government was "disappointed" by the senator's decision.
"We believe that he has done the wrong thing," he told the chamber.
"Only seven months ago, Senator Bernardi was elected by the people of South Australia to serve in the Senate as a Liberal senator."
Liberal Senators watch on as Cory Bernardi announces he's quit the Liberal Party. Photo: Tom Finnigan Source: SBS News, Tom Finnigan
The conservative South Australian senator did not attend a Coalition meeting this morning, nor a church service to mark the beginning of the 2017 parliamentary season in Canberra.
Attorney-General George Brandis said it is "always a sad day when someone leaves the family".
He added that Senator Bernardi would now be dealt with like the rest of the crossbenchers in a "professionally courteous and respectful way".
"We will treat him as a colleague, and for many members of the government he will continue to be a personal friend, but we do not condone what he has done,” Senator Brandis said.
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Labor was quick to respond and said it was a "consequence of the failure of leadership by the Prime Minister".
"We know Senator Bernardi's view is far from an isolated one in this government," Leader of Opposition Business in the Senate Penny Wong said.
"We know that amongst those opposite he is one of many, one of many, who believe that this government stands for nothing."
Outside Senate doors this morning, Senator Bernardi's Liberal colleagues were still calling for unity.
"Cory's a friend of mine, and I would certainly prefer that he was staying and fighting within the Coalition," Liberal Senator Zed Seselja told reporters.
Senator James Paterson said losing Mr Bernardi would be "sad and disappointing".
Former prime minister posted on Twitter that deeply regretted his colleague's decision to leave the party, and said he was "disappointed that more effort has not been made to keep our party united".
Mr Bernardi's departure from the Coalition will reduce the government's majority in the Senate. The Coalition would only have three more senators than Labor, while the crossbench would grow to 12 members.
The Coalition will need the support of nearly all of them to pass bills, assuming Labor and the Greens oppose them.
Liberal Democratic senator David Leyonhjelm, a libertarian, says he has spoken with Cory Bernardi about his anticipated defection.
He says he sees Mr Bernardi as a potential ally on the crossbench, particularly in light of Family First senator Bob Day's resignation late last year.
Mr Leyonhjelm says he disagrees with Cory Bernardi's conservatism on a range of social issues, but can find common ground on a belief in small government and reduced taxation.
"I have missed Bob Day not being in the chamber," Mr Leyonhjelm said.
"We don't agree on social issues very much at all, and that's the same situation with Cory. But Cory is a fierce warrior for free markets, low taxes, individual liberty... except on a few issues."
Mr Bernardi has been an outspoken conservative in the Turnbull government, making clear his opposition to same-sex marriage and section 18C of the Racial Discrimination Act.
He is also a vocal supporter of Donald Trump.
But according to fellow South Australian Senator Nick Xenophon, his economic policy ideas could not be more different from those of the US president.
"Last time I checked, I think Cory Bernardi has his own hair and there are no artificial colourings or flavourings in it," Mr Xenophon said.
"In serious policy terms, Cory Bernardi supports free trade agreements, he supports free market economics, the sort of economics that have seen the devastation of manufacturing in this country, so the short answer [to whether Bernardi is an Australian verson of Trump] is no," he said.
- With AAP
