The Green Party plans to formally suspend two MPs who resigned in protest at co-leader Metiria Turei's actions.
They could also go further and expel senior MPs Kennedy Graham and David Clendon from the party altogether, forcing them to finish their Parliamentary careers as independent MPs.
Co-leader James Shaw said he was sorry to lose Graham and Clendon, who resigned from the party this evening.
He respected their decision to stand down, but did not respect the way they did it.
"The way they have chosen to go about it is strongly in violation of every norm, culture and process that we have," he told reporters at a late-night press conference at Parliament.
And despite the disarray caused by Turei's confessions about benefit fraud and her subsequent handling of it, Shaw said he fully backed her, and the 12 other members of the caucus were behind her.
"As I keep saying, there is a conversation now happening, there is a constituency coming forward who are saying thank you for taking this on.
"They are actually getting representation in Parliament for first time."
Although Turei's resignation had been a "live debate" over the past few weeks within the party, she would still be co-leader on election day.
"She will stay on," he said.
The party will discuss the suspension of Graham and Clendon at a caucus meeting tomorrow morning. They way they handled their resignation had put the party "at extreme risk" so close to the election.
"They didn't have to do it this way," he said, adding that they should have waited until after the election.
Shaw said he would seek to formally expel the two MPs from the party - a step further than suspension. Shaw said this was possible with the Green Party rules for MPs who brought the party into disrepute.
He rejected suggestions that Turei had also brought the party into disrepute, saying her problems were historical.
"We felt that resigning for something that happened 25 years ago was totally disproportionate.
"Frankly, I am kind of over the level of interrogation she has received," he said, adding that she appeared to be treated more harshly because she was poor.
Graham and Clendon have removed themselves from the party list and from their electorates, effectively meaning they will not make it back into Parliament.
The party had moved to erase their records this evening, wiping them from the list of candidates on the party's website.
'LYING CAN NEVER BE CONDONED'
The two men explained their reasons for resigning in a joint statement.
"We do not believe that lying to a public agency - Winz, IRD or any other - can ever be condoned."
They said civil disobedience was sometimes justified, but this should be limited to "fundamental breaches of human rights" such as torture, genocide or apartheid.
"It does not stretch to the adequacy of an income benefit," they said.
They added: "The timing by Metiria of her admissions, and her continuing justification of her actions, we see as incompatible with the standards of leadership of the Green Party."
Graham and Clendon called for the party to appoint a new female co-leader for the election.
"As long as Metiria remains co-leader of the party we are unable to support the Green campaign for the 2017 election."
Turei announced on Friday that she would not resign over her controversial benefit history, but that she would not seek a ministerial position if the Greens were in government after the election.
Graham was ranked eighth on the list, and was likely to get re-elected in the September election. Clendon was ranked at 16, placing him on the cusp of re-election.
Graham has been an MP since 2008. Clendon came into Parliament in 2009 on the list, replacing Sue Bradford. He was demoted in the list rankings for this year's general election, falling from 11th in 2014.
Green Party general manager and campaign director Sarah Helm revealed this evening that both MPs were asked by the party to stand down at the general election but refused to.
As a result, they were demoted in the list rankings, she said, and had been disgruntled ever since.
"I think they were looking for a reason to resign or withdraw."
Helm also revealed that the two MPs had been "underperforming" in the election campaign so far. Clendon had made just one phone call, and Graham had done three to four hours' campaigning work, she said.
Shaw said this evening that the party was disappointed with the MPs' decision to resign.
"I want to thank David and Kennedy for their service to the Green Party. We wish David and Kennedy all the best," he said.
Shaw said their withdrawal meant candidates including Hayley Holt moved up two places on the list and closer to Parliament.
The incident was reported about 7.30pm.