Former prime minister Malcolm Turnbull has blasted the Liberals’ decision to preference One Nation in the upcoming Farrer byelection as “a retrograde move”.

The Liberals will back One Nation’s David Farley over community independent candidate Michelle Milthorpe in the May 9 poll in the NSW seat previously held by former opposition leader Sussan Ley.

Her successor, Angus Taylor has defended One Nation as the “least worst option”, apart from Nationals pick Brad Robertson.

“We’ve got … a group of teals in this parliament that are trashing our energy system, are ready and have been trashing access to water and the strength of our agricultural communities,” he told ABC’s Insiders on Sunday.

“We simply cannot endorse that.”

Milthorpe, a teacher and advocate for child sexual assault survivors, rejects the “teal” label but her campaign has the backing of Climate 200, the political funding body founded by Simon Holmes a Court.

On Monday, Turnbull told a climate and energy panel that such a decision would have been “inconceivable” during his time as Liberal leader – “or indeed, Tony Abbott’s, or John Howard’s”.

“One Nation – apart from preying on racism and division, its whole MO for 30 years, Pauline Hanson’s MO would be to divide Australia – is, of course, right out there in the climate change denial business. It says, climate change is rubbish, the science is not yet proven,” he said.

“[One Nation] is literally out of the dark ages in terms of economic reality.”

He said it was “very, very sad” that a mainstream party such as the Liberals would prefer that over other options.

“It’s a really retrograde move. And I hope the Liberal voters in Farrer do not preference One Nation at all. They should put One Nation last, in fact,” he said.

Howard also once famously said One Nation should be placed last on every Liberal Party how-to-vote card around Australia. He has since tempered his 2001 edict, declaring preferences with One Nation should be considered on a case-by-case and seat-by-seat basis.

In what would be a further boost to One Nation, the Victorian Liberals are also planning to preference the party ahead of Labor as a default position for November’s state election, unless there is a “particularly odious candidate” or other exceptional circumstances, according to reports in the Nine newspapers.

But the office of Victorian Liberal leader Jess Wilson, a member of the party’s state campaign strategy committee, categorically denied discussions on preference strategy.

“This story is false,” a spokesman for Wilson said.

“The state campaign strategy committee has not once discussed One Nation preferences for the state election.

“No decision, in-principle or otherwise, has been made about preferencing any party.”

Wilson previously ruled out forming an “alliance” with One Nation for the state election, with polling showing one-fifth of Victorian voters back Pauline Hanson’s populist party.

But the state Liberals have preferenced One Nation’s Darren Hercus ahead of community independent candidate Tracee Hutchison for Saturday’s Nepean byelection.

Liberal candidate and Mornington Peninsula shire mayor Anthony Marsh has a fight on his hands to retain the state seat in a three-way contest triggered by the sudden resignation of Sam Groth.

Also on Insiders on Sunday, Taylor singled out Iran as a “bad country” while selling his immigration policy, forcing party deputy and prominent moderate Jane Hume to clarify the country would not be subject to a blanket ban.

Taylor also criticised the booing of the Indigenous acknowledgement of Country at Anzac Day services but argued Welcome to Country ceremonies, a different cultural practice, had become “devalued by overuse”.

Defence Industry Minister Pat Conroy accused Taylor of “trying to be all things to all people”.

“He’s just a pale imitation of One Nation at the moment,” he told ABC News on Monday.

Deputy Prime Minister Richard Marles said Australians would judge the Liberals on how they ordered their preferences.

-with AAP