The National Party is demanding someone take responsibility after its MP Mark Mitchell said a New Zealand First MP was sent to scare him out of supporting a local project.
However, NZ First is calling it a "misunderstanding", in a conversation which "got out of hand".
Mr Mitchell said NZ First MP Jenny Marcroft told him over the weekend to stop supporting a project in his Rodney electorate if he wanted it to get public funding.
He said he was also asked for an assurance National would not ask questions about the Mahurangi River Restoration Project in Parliament if it went ahead.
"Ms Marcroft told me this was because the government was unhappy with me revealing the illegitimate use of Defence Force aircraft by Defence Minister Ron Mark."
Speaking to RNZ, Mr Mitchell said Ms Marcroft - who entered Parliament last year - had revealed she was acting on behalf of an unnamed minister.
"I was flabbergasted. I was completely taken aback ... I said to her 'you've been absolutely, hopelessly compromised'.
"It's a complete disgrace," he said. "This is not New Zealand."
He said the minister responsible needed to own up rather than letting Ms Marcroft take the blame.
"No one's stepping up to actually accept responsibility for the fact that they sent a brand new MP along to deliver a message that they were not capable of delivering themselves."
He said Prime Minister Jacinda Ardern now had to decide how she would respond.
"It's extremely serious ... it's serious enough that the minister should have already stepped up and offered their resignation."
He would consider whether to take further action after hearing Ms Ardern's response, he said.
Ms Marcroft declined to comment when contacted by RNZ, but New Zealand First leader Winston Peters said in a statement Mr Mitchell had "misunderstood her underlying point".
"After the conversation had got out of hand [Ms Marcroft] consulted with me late on Saturday afternoon and was advised by me to issue an apology," said Mr Peters.
"Ms Marcroft was not under instructions by any NZ First Ministers regarding funding ... New Zealand First does not seek to constrain opposition MPs from criticism of the government."
Mr Mitchell rejected the response and said he had yet to receive an apology.
"There was certainly no misunderstanding at all ... I was very, very clear on the message I'd been given and I was also very clear with Jenny with what I thought about that."
He said the only response he'd had from NZ First was a text message from Ms Marcroft an hour after the meeting at Orewa Surf Club.
"Hi Mark, on reflection I have considered the substance of our conversation to be incorrect and would therefore ask that you kindly disregard it," the text message read.
"Thank you for your generosity in this matter."
Ms Marcroft finished the text by noting that the Mahurangi River Restoration Trust may wish to apply for funding at some point and that it had potential for the region.
Ms Ardern appeared to be blindsided by the news when questioned by reporters at her weekly press conference on Monday afternoon.
She said she wanted to get more details before responding, but stressed the Provincial Growth Fund was not a political process.
"The process ... is not contingent on support for this government at all and there is plenty of proof of that," she said.
"We've had bids that have been supported by National MPs and we've had bids that have already been successful that have been championed by ex-National MPs."