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Labour's hopes for state funding of political parties are all but dead in the water as United Future leader Peter Dunne firms his opposition to it and senior Government figures admit they do not have enough support for the idea.
The contentious push for state funding is part of a wider package of electoral reforms Labour has been discussing with smaller parties.
Over the weekend Maori Party co-leader Tariana Turia said she would not back state funding and felt the money would be better spent tackling child poverty.
Yesterday, Mr Dunne voiced "real concerns" about Labour's plan.
While a final United Future position would be decided at next week's caucus meeting, "I'd be very surprised if we supported it", he said.
New Zealand First leader Winston Peters has already indicated his party is against the measure, and with National opposed Labour is short of the 61 votes it needs to pass state funding into law despite having the Greens on its side.
Acting Prime Minister Michael Cullen conceded as much yesterday, saying on Newstalk ZB that "it doesn't look as though we have the numbers for the state funding of political parties".
Labour and National would have each got $1.14 million under the proposed funding formula.
Mr Dunne said he found the idea of giving public money to a political party that was not accountable for how it spent the funds unacceptable.
"If we were simply going to boost the funding for parliamentary activities, that is one thing," Mr Dunne said. "But this isn't even that. This is saying we're just going to give money to party organisations."
Mr Dunne was also critical of the "secretive" way Labour had handled the reform process and said that with an issue of that type, the National Party should have been involved in talks early.
With the chances of state funding fading, the focus of Labour's discussions with smaller parties will now be on the detail of a clampdown on anonymous donations and third-party campaigning.
Dr Cullen said he was confident there was support for some "quite major" reforms in that area, including opening up the faceless trusts that had poured money into National in recent years.
