Prime Minister Tony Abbott told government MPs he had to schedule an early morning visit to a cancer research centre in Melbourne on Tuesday so that he could justify billing taxpayers to be in the city for a "private function" the night before.
Mr Abbott made the admission at the regular meeting of Liberal and Nationals MPs after being taken to task by one his own senators for turning up an hour late.
Several MPs told Fairfax Media that the Prime Minister described the private function as a "fund-raiser" to the party room.
The issue came to a head when LNP senator Ian Macdonald, who has been a frequent critic of his own side since he was demoted from the frontbench after the election, told Mr Abbott his priority should have been the regular party room meeting, which is held every Tuesday morning when Parliament is sitting.
But Senator Macdonald was swiftly rebuked by colleagues including backbencher Ewen Jones, who said Senator Macdonald's constant criticism of his own team had "overstepped the mark".
"I have the highest regard for Ian as a man but the direction he has taken is unfortunate," Mr Jones said.
Several government sources told Fairfax Media they were stunned to hear the Prime Minister respond to Senator Macdonald's complaint by saying he had to schedule an official function on Tuesday morning so he could justify being in Melbourne for a fund-raiser the night before under entitlements.
Cabinet Minister Malcolm Turnbull has told ABC Radio on Wednesday morning Mr Abbott was "upfront" about why he was in Melbourne on a parliamentary sitting day but said he "did not recall" the prime minister saying anything about entitlements.
"He said he was in Melbourne and he did go to a private function...I think Tony was quite upfront, he said he had been in Melbourne and he had been to a fund-raiser the night before," he said.
Mr Abbott visited the Peter MacCallum Cancer Centre and told a news conference he was there to talk about the proposed Medical Research Future Fund.
He made no new announcements but reiterated his government's commitment to science and research.
The government wants to pay for the fund with some of the proceeds from the proposed $7 GP fee, which has been blocked in the Senate by Labor, the Palmer United Party and the Greens.
The Prime Minister's office did not deny Mr Abbott had made a fund-raising visit to Melbourne. A spokeswoman for Mr Abbott said: "The Prime Minister attended a private function in Melbourne [on Monday] night. All prime-ministerial travel is undertaken within entitlement.
"Whenever the Prime Minister travels he maximises his visits by ensuring he participates in community events, business visits and local media."
The spokeswoman confirmed the Prime Minister "ran a little late" to the joint party room meeting because his visit in Melbourne ran "over time".
She said the Prime Minister was a "passionate supporter" of medical research and "makes no apologies for his visit".
Mr Jones, who has been in Parliament for about four years, said the meeting was the first he could recall the Prime Minister being late for "in all my time here".