Provisions in the Electoral Bill to increase spending limits for candidates at elections will be dropped if the Labour party joins an all-party committee dealing with corporate donations.

The Minister for the Environment, Mr Dempsey, said he was not asking the Labour party to change its stance on corporate donations.

"I am simply asking them to join a committee without preconditions, to look at all the angles and to tease out all the consequences that changes to the funding system might entail."

He said: "If Labour takes up this offer, as a gesture of goodwill I will drop, at this time, the current proposal in the Electoral (Amendment) Bill to increase expenditure limits for candidates at an election."

However, the Labour leader, Mr Ruairi Quinn, said his party "will not engage in this charade". He found Fianna Fail's "insistence on maintaining corporate donations" and the Taoiseach's refusal to publish legal advice on the issue "manifestly repugnant".

They were both speaking on the second day of a two-day Labour Party motion condemning the Minister for the Environment for 15 failures on a range of issues from housing to road safety to environmental protection and waste management.

Mr Quinn accused Mr Dempsey of "aiding and abetting" the corruption of politics through the legislation by increasing election spending by up to 50 per cent. The Bill would institutionalise corruption.

He said if the Taoiseach had legal advice to the effect that banning corporate donations was illegal or unconstitutional he was "duty bound" to put it on record.

But, Mr Quinn added, "we don't believe you have any such advice".

During an aggressive debate, Mr Dempsey defended his record, as did the Minister for Justice, Mr O'Donoghue, who said the attack on the Minister by Fine Gael in particular was "a lame political attempt to light a diversionary bonfire".

Labour's environment spokesman, Mr Eamon Gilmore, said Mr Dempsey's performance and lack of leadership had been "pathetic". There was no area, however, where more pain, grief and suffering had been caused than the housing.

The Government defeated the Labour motion by 72 votes to 66 votes.