Australia does not allow dual citizens to sit in parliament, with New Zealand confirming later today its citizenship was automatically granted to Joyce via his father.
The revelation has major implications for Prime Minister Malcolm Turnbull's Liberal-National coalition government, which won national elections last year with 76 seats in the House of Representatives -- a narrow one-seat majority.
Joyce has refused to step aside, instead referring the case to the High Court, saying that the solicitor-general was confident he would not be disqualified.
The obscure rule was little known until recently but several lawmakers have fallen victim to it in recent months, leaving parliamentarians scrambling to clarify their ancestral ties.
"Needless to say, I was shocked to receive this information," Joyce told parliament after hearing he may be a dual citizen.
"I've always been an Australian citizen born in (regional city) Tamworth. Neither me or my parents had any reason to believe that I may be a citizen of any other country."
The dual citizenship crisis kicked off in July when the minor Greens party's co-deputy leader Scott Ludlam resigned after revealing he had dual Australian-New Zealand citizenship.
The crisis soon claimed other victims, including Canadian-born Greens senator Larissa Waters and Resources Minister Matt Canavan, who left cabinet after finding his mother signed him up to Italian citizenship in his 20s.
Joyce said Monday he had been contacted by the New Zealand High Commission last week to advise him that he "could be a citizen of New Zealand by descent".
'Joyce a New Zealander'
A spokesman for New Zealand Internal Affairs Minister Peter Dunne that there was no doubt about Joyce's status, telling AFP that "as far as New Zealand law goes, he is a New Zealand citizen under the Citizenship Act".
"Mr Joyce was born to a New Zealand citizen father and even though (the father) migrated to Australia in the 1940s that citizenship remained and he passed on the right of citizenship ...to his children."
He said citizenship was automatically granted and did not need an application.
Turnbull on Monday wrote to Labor opposition leader Bill Shorten to ask if his party wanted to refer any MPs over their citizenship status to the High Court so all the cases could be considered as a bloc, The Australian newspaper reported.
Canavan and minor party One Nation's Indian-born Malcolm Roberts have already had their elections referred to the court, which will decide if they had taken reasonable steps to renounce their foreign allegiances.
Almost half of Australia's 24-million population was born overseas or have at least one parent born overseas, according to last year's census.
Indigenous people account for about three percent of the population.
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