Prime Minister Scott Morrison says he will only introduce his highly criticised model for a federal anti-corruption body if Labor promises to let it through parliament unchanged.
Labor leader Anthony Albanese has promised to legislate a federal anti-corruption commission by the end of the year if he wins government on May 21.
It is fast turning into an election issue as voters call for increased transparency and accountability of political decision-making.
Mr Morrison this week backflipped on his promise to introduce a corruption watchdog as legal experts call for urgent reform to clamp down on questionable spending of taxpayer funds.
"I'm very critical of some of the ICACs, particularly in NSW," Mr Morrison said on Saturday.
"I don't think that's what we need."
Legal experts have criticised Mr Morrison's floated model as ineffective.
Labor's proposal would have powers lacking in Mr Morrison's, including holding public hearings of politicians, retroactive powers and the ability to act on public tip-offs.
Mr Morrison's comments come as research from the Centre for Public Integrity raises questions about $55 billion worth of government grants during the past four years.
The think tank analysed billions of dollars in federally approved grants that have at times been green-lit with little oversight by the Morrison government.
It proposes a rejigged system for grants, with transparent criteria, quarterly reports by ministers justifying the spending of taxpayer money and an independent oversight body.
Former Federal Court judge Michael Barker said the grant spending under the Morrison government showed it was time for an overhaul.
"Currently there is little or no oversight of grant spending," Mr Barker said.
The Morrison government has been dogged throughout its tenure by accusations of misusing taxpayer money, funnelling cash instead to must-win seats or friendly electorates with little oversight.
Mr Morrison rejected the analysis of the spending, saying the way governments supported vulnerable communities was through grants.
"The way the government's support vulnerable communities is through grants," he said.
The prime minister promised at the 2019 election to establish a national integrity commission but did not subsequently introduce legislation to parliament.
Government frontbenchers Stuart Robert and Simon Birmingham on Friday insisted the coalition would again try to establish a corruption watchdog.
Mr Albanese said electing a Labor government on May 21 was the only way to ensure it would happen.
"Mr Morrison has delayed and obfuscated for over three years. And then this week it became clear he has absolutely no intention of honouring his promise to deliver a national anti-corruption commission at all," he said.
"So the question for Mr Morrison is: 'Why do you fear an anti-corruption commission? What is it you're afraid they will find?'"
Mr Morrison also stuck by his personal pick of candidate for the Sydney seat of Warringah, Katherine Deves, despite her recent history of anti-trans comments prompting fellow Liberals to call for her to get the boot.
Ms Deves mocked fears inside the trans community of suicide due to discrimination, called trans children "mutilated" and compared her resistance to trans athletes to opposing the Holocaust.
Mr Morrison said it was important for people to respect human dignity and Ms Deves had been "insensitive" but she had apologised and he would not be joining the "pile-on".
Both major party leaders are out on the hustings on Saturday after honouring an election truce on Good Friday, with the campaign expected to pause again on Easter Sunday.
