The Turnbull Government is demanding the resignation of Senator Sam Dastyari, while his Labor colleagues seem divided over whether the NSW senator should be allowed to remain in the Upper House.
Senator Dastyari is yet to face the media in the wake of new allegations about his ties to China.
This week it was reported the senator tried to persuade his party's deputy leader Tanya Plibersek not to meet a pro-democracy activist during a visit to Hong Kong in 2015.
Fairfax Media cited three sources who said Senator Dastyari tried to stop Ms Plibersek from meeting academic Joseph Cheng Yu-shek, who is a critic of China's influence in Hong Kong. The sources said Ms Plibersek was surprised by her colleague's intervention, Fairfax reports.
The report is the latest in a string of allegations around Senator Dastyari's links with Chinese donors, which recently saw him demoted from leadership positions in the Labor party.
Several weeks ago it was reported the NSW senator advised a Chinese donor on simple counter-surveillance techniques. An audio recording of Senator Dastyari defending China's position on the South China Sea surfaced in the same week.
Speaking on the ABC's Q&A program, Prime Minister Malcolm Turnbull took aim at Labor leader Bill Shorten for failing to sack Senator Dastyari.
"Dastyari has quite plainly been acting in the interests of another government or another power," the prime minister said.
"It is extraordinary that Bill Shorten, who wants to be prime minister of Australia, is failing to put Australia's interests first."
The debate over the maverick Labor senator and Chinese influence comes in the leadup to a crucial by-election in the seat of Bennelong this weekend, where the incumbent Liberal MP John Alexander is under pressure from Labor's Kristina Keneally.
Senator Sam Dastyari is under increasing pressure to quit over China's alleged influence on him. (AAP)
MS Keneally, a former NSW premier, is claiming Chinese voters in the electorate have told her they were offended by the prime minister's words.
“They are really alarmed by the prime minister’s rhetoric,” she said.
“They see it as China-phobia.”
But Mr Turnbull said every country was entitled to defend its interests and dismissed the allegations of China-phobia.
"The suggestion that I, or my Government, or Australia generally, is anti-Chinese is outrageous!" he said.
Cabinet minister Christopher Pyne stopped short of Immigration Minister Peter Dutton's description of Senator Dastyari as a "double agent".
But Mr Pyne warned Senator Dastyari could be promoted to cabinet if Bill Shorten becomes prime minister, despite his "inappropriate" behaviour.
"Bill Shorten's reaction to it has not been that of an alternative prime minister," Mr Pyne told ABC radio.
Crossbench MP Andrew Wilkie said at the very least, Senator Dastyari had shown very poor judgment.
"At worst, his behaviour and his contribution to public policy-making in the Labor Party has been influenced adversely by the Chinese government," Wilkie told ABC TV.
Former federal Labor leader Kim Beazley echoed calls from sitting Labor frontbenchers urging Senator Dastyari to reflect on his position.
"Sam needs to ask himself the question, and he probably is asking himself the question, how do I advance the cause of the Labor Party - by being there or going away?" Mr Beazley told Fairfax Media.
Mr Beazley's intervention comes after ALP health spokesperson Catherine King and her colleague Linda Burney said Senator Dastyari needed to think deeply about his future.
Ms King said his political career was "in essence going nowhere".
- with wires
