Conservative ministers have hinted they could back down from plans for large cuts to the funding of opposition parties including the SNP and Labour.
The Tories announced moves to slash “Short Money” by almost a fifth within weeks of winning the General Election.
Yesterday former Deputy Prime Minister Nick Clegg denounced the plan as “spiteful and petty” and warned that ministers would “rue the day”.
The SNP accused ministers of "stripping back" the ability of opposition parties to hold them to account.
Amid signs of growing unrest on the issue on the Tory benches ministers announced a new consultation on the plans.
Some Tory MPs are concerned that the change will erode the current principle of cross-party co-operation on the issue.
Labour have warned that the cuts could force the party to make staff redundant.
Short Money is designed to help smaller parties act as an effective opposition, improving the work of government.
Labour has attacked the Tory government for planning the cuts at the same time as hiring more special advisers (spads), at an extra cost of £2.5m a year.
Announcing the review, minister John Penrose said that smaller parties would have a "huge opportunity to contribute, as will other people on all sides of the house as required."
Patrick Grady, the SNP Glasgow North MP, hit out at ministers saying "our ability to hold the Government to account is being stripped back. There is one rule for Tory cronies and another rule for everyone else".
Later No 10 said that ministers still intended to cut Short Money.
A spokesman said: "We have made clear that Short Money has increased over the years. We are in a period of reductions across government, making savings across Whitehall departments. A 19 per cent saving in Short Money is only fair and right."
He also said that there were now fewer special advisers than under the last government.
Critics say that is because the loss of the Liberal Democrats from government eliminated the need for special Lib Dem spads.
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