CIA denies Palmer's claims

In email correspondence to the ABC, a CIA spokesman said the claims are inaccurate.

"Simply put, these allegations are false," he said.

Writing on Twitter, Mr Palmer said, "Green movement in Queensland led by Drew Hutton should not be funded by foreign interests. Bob Brown isn't associated the same way."

Earlier, Treasurer Wayne Swan criticised Mr Palmer's attack on the Greens calling it "loopy". Foreign Minister Bob Carr has also slammed Palmer's claims and a Queensland candidate named by the mining magnate has flagged defamation action.

Mr Palmer used a media conference in Brisbane on Tuesday, in the final week of the Queensland state election campaign, to claim a CIA-funded US foundation had backed green groups and Greens candidates.

The Waratah Coal executive chairman, who is the single largest donor to Queensland's Liberal-National Party, also accused Greens members of "treason" for trying to bring an end to Australia's coal industry.

One of the Greens candidates named by Mr Palmer, Drew Hutton, is planning to sue the mining magnate for defamation.

"As a proud Australian, I am disgusted by these bizarre and dishonest allegations," Mr Hutton said in a statement.

Mr Palmer appeared to retract some of his comments on Wednesday, saying Australian Greens Leader Bob Brown was a "patriot" and a "good man".

Mr Swan told Sky News the comments reflected badly on the Liberal Party.

"It's seriously loopy stuff from Mr Palmer," the treasurer said.

"When you consider that Mr Palmer is one of the biggest donors to the Liberal Party and somebody Mr Abbott listens very closely to, it does have very important political implications."

Opposition Leader Tony Abbott laughed off the comments on Wednesday, saying Mr Palmer was right to claim the Greens wanted to shut down the coal industry.

"He's a character. He's a larger-than-life character," Mr Abbott told Network Ten.

"And when he says the Greens want to stop the coal industry he's absolutely right. Of course the Greens want to stop the coal industry."

However, Senator Brown said the claims were serious and defamatory, and Mr Palmer, Mr Abbott and Queensland LNP Leader Campbell Newman needed to repudiate them.

"At the end of the day it's their integrity which is under scrutiny here, not ours," Senator Brown told reporters in Canberra.

He said Mr Palmer had deliberately fired "an Exocet (missile) into the growing influence that the Greens have in the future of Queensland".

"I think it will have potentially a reverse effect," he said.

Foreign Minister Bob Carr said the comments would have investors and the US government "wondering if some part of the Australia political system has lost its collective marbles".

Greens MP Adam Bandt compared Mr Palmer's comments to the ravings of a lunatic.

"If someone stood outside a train station in Melbourne and told you there was a sinister plot where five people were meeting secretly to fund political parties and governments, and the CIA was involved, you'd walk straight past them," Mr Bandt told reporters in Canberra.

The Greens attempted to suspend business in the Senate on Wednesday to force the coalition to condemn Mr Palmer's comments, but Labor sided with coalition senators to reject his motion.