Labor could still move further in support of the government's tax cuts but says it will seek to persuade enough senators to back its compromise position.
The opposition frontbench has decided to support the first stage of the government's $158 billion tax plan and back the second stage if its start date is brought forward by three years to kick in from July.
This is a change from the position it took to the election - which was to oppose the second and third stages entirely - and shadow treasurer Jim Chalmers on Tuesday described this new stance as a negotiating position.
"A responsible opposition, a responsible alternative government, does brainstorm ideas to try and get the place moving again," Dr Chalmers told the National Press Club in Canberra.
"All of our effort is in trying to convince the parliament that the most responsible thing to do in the context of a floundering economy is to pass stage one and two, (and) to defer stage three for a subsequent discussion."
Opposition Leader Anthony Albanese characterised Labor's offer as giving the government a choice between an outcome and an argument.
But acting treasurer Simon Birmingham said Labor apparently hadn't heard Australians at the election.
"We're not doing this just because we won the election," he told reporters in Canberra.
"We're doing this because it was a promise we made to the Australian people that we would lower taxes, that we would reform the income tax system."
The first part of the tax plan doubles a tax offset for people on low and middle incomes for four years.
Stage two would lift the threshold for the 37 per cent tax rate from $90,000 to $120,000 while the third stage reduces the 32.5 per cent tax rate meaning that, combined with changes already in law, everyone earning between $45,000 and $200,000 will pay only 30 per cent tax from July 2024.
Dr Chalmers says the country gets the most bang for its buck by cutting taxes for lower income earners because they are more likely to spend it, giving the economy much-needed stimulation.
"If the government was thinking rationally about what the economy needs now, and what is possible in the parliament and the fact that stage three doesn't come in for another 262 weeks, then they would pick up our idea and they would run with it," he said.
At the moment, a majority of the senate opposes the third stage, although the government only needs to sway four of the six cross benchers.
But the government is adamant it won't split its package.
It is reported to be considering forcing the Senate to sit without a break until the tax cuts are passed, however, it would need the support of crossbenchers to make such a move.
The government already has Senator Cory Bernardi on side, but the other cross benchers are still undecided.
One Nation leader Pauline Hanson, who controls two Senate votes, says she discussed her position with Mr Albanese on Monday and would follow up next week when parliament returns.
One Nation has ruled out supporting the coalition's entire tax plan, saying infrastructure spending and ensuring cheaper power should be a priority.
Centre Alliance also holds two votes in the upper house and is yet to make a call on the issue.
The only other crossbencher, Jacqui Lambie, hasn't confirmed where she stands.
The nine Greens senators oppose it.
Parliament sits for three days next week but Tuesday and Wednesday will be taken up with the ceremonial opening and condolences for Bob Hawke, leaving only Thursday to deal with legislation.
