National Party MP Gerry Brownlee is challenging Nick Smith for the deputy leadership.
Smith says he received a call from leader Don Brash on Sunday night informing him that Brownlee would challenge for the position at Tuesday's caucus meeting.
Smith, who has been in the job just three weeks, said he is now considering resigning.
He said he needs to recanvas the level of support he has within the caucus.
Smith said he would not continue in the job if he did not have the confidence of his leader, Don Brash.
Smith has been on stress leave for two weeks following a clash with the party's chief whip John Carter, just days after his election as deputy leader.
Smith said he was exhausted and needed a break after dealing with the leadership challenge, seabed and foreshore issues and a contempt of court charge.
"I overdid it during National's leadership change and just needed time to recharge my batteries."
Don Brash became the National Party's third leader in two years in October after Bill English was ousted by a narrow vote.
Recent polls have shown a significant rise in support for National since Brash became its new leader.
The latest ONE News/Colmar Brunton poll showed National had gained party support and broken the 30% barrier.
The latest poll, which was the first substantive test of the new National line up, also had Brash making a huge impact on the preferred prime minister standings.
The opposition revamp had no effect on the Labour Party's poll rating, however, which remained steady on 45% support.
In his first public speech as National Party leader, Don Brash promised centre-right policies and gave the government a failing report card.