Labor says Cash's later explanation, in which she continued to deny prior knowledge of the raids, defied belief.
The Government today sent out senior ministers Christopher Pyne and Christian Porter to defend their colleague and dismiss calls for her resignation.
"We are not going to be lectured by the Labor Party about the Westminster system of government," Pyne told reporters in Canberra.
"The reality is Michaelia Cash told the Senate the truth and as soon as she found out she'd been misled, she corrected the record."
Porter said Cash did not knowingly mislead Parliament.
"Michaelia Cash says that she did not know about the actions of her staff, she is absolutely to be believed," he told ABC TV.
Labor is not convinced.
"Michaelia Cash has to go and the Prime Minister is up to his neck in this," Opposition frontbencher Tony Burke told Sky News.
He said Prime Minister Malcolm Turnbull either didn't ask or knew not to quiz Senator Cash and adviser David de Garis about the tip-off when he met them yesterday.
"Michaelia Cash misled the Senate five times on what she herself said was a very serious allegation that she was offended to hear," Burke said.
"We're meant to believe her office watched her do that and didn't tell her what happened."
Crossbench senator Nick Xenophon is prepared to take Cash at her word.
"In my dealings with Senator Cash she's always been pretty straight up and down with me," he told ABC radio, adding the Labor call for her resignation was not reasonable.
But he said an independent inquiry was needed to determine how information about the raids was leaked.
The Australian Federal Police raided the AWU offices after the Registered Organisations Commission gained a warrant from a magistrate amid concerns documents could be destroyed.
Following a referral by Cash, the commission has been investigating the legitimacy of the AWU's A$100,000 donation to activist group GetUp! in 2005 when Labor leader Bill Shorten ran the union.
- AAP