During question time in Parliament yesterday, Mr Cunliffe grilled Mr Key about his party's record on regional development.
During his response, Mr Key said he believed the regional New Zealand economy was doing well.
"I do know of cases where unemployment might rise in the regions and they're in Northland and Napier," he said.
"And the reason I know that is that they're the place where Labour candidates have been talking to the Sunday Star-Times about leader David Cunliffe."
Labour's Te Tai Tokerau candidate and serving list MP Kelvin Davis, who recently broke ranks with Labour to support the Puhoi to Wellsford motorway extension, categorically denied the claim he was one of the sources.
Mr Nash said he had been aware there was a rumour circulating that he was the source of the story.
"I must admit when I read it [the newspaper article quoting the party source], apart from the swearing, it sounds a little bit like me."
However, he said he was not the source and the comments could have come from "any of the 15,000 members who were out putting up hoardings in the rain or delivering pamphlets in the cold or this sort of carry-on".
"I have been accused by a lot of people. I told them it wasn't me. I've got a right royal battle on my hands in Napier. My focus is on that."
He said the article was "a non-story" but the National Party "will milk it for a little while and then it will be another issue".
National's Napier candidate, Wayne Walford, could not be reached for comment but National Tukituki MP and Cabinet minister Craig Foss said the controversy reflected a lack of consistency he had picked up on between Labour's official policy positions and "what's being said in the Bay" by the candidates.
"Labour have got their own challenges at the moment.
"We're seeing, particularly in Hawke's Bay, it looks very much like what happened to us in 2002 [when National's vote dropped significantly in the election].
"Candidates are just running their own individual campaigns, trying to win their electorates, forgetting that it is the party vote that decides the Government," Mr Foss said.
Mr Cunliffe said yesterday he believed he knew who it was and was certain it was not a current MP, despite the person being quoted as if they were in caucus.
He refused to comment further when asked if he had contacted the person, saying it was between them.
Asked if the criticism was justified, he said that, had he known how bad the polls were at the time, he would not have gone on holiday, or at least would have taken a shorter break.
