Prime Minister Malcolm Turnbull has expressed his anger over Josh Frydenberg being forced to defend his citizenship status, saying it’s absurd to say he is a citizen of a country that would have killed his mother and grandparents.
Mr Turnbull slammed the "witch hunt" as something that has no place in Australia.
"That is not part of the Australian way, not part of the rule of law," he said on Friday.
He said the proposition that Mr Frydenberg was a citizen of Hungary was "ridiculous".
"I wish that those who made these allegations about Josh Frydenberg think a little deeper about the history of the Holocaust," Mr Turnbull said.
"Has this witch hunt become so absurd that people are seriously claiming that Josh Frydenberg is a citizen of a country which stripped his mother and family of their citizenship and would’ve put them into the gas chambers?"
Josh Frydenberg. Source: AAP
As the speech unfolded Twitter erupted with criticism of Turnbull as many felt he was overlooking the issue on Manus Island while mentioning Holocaust victims.
Cabinet minister Josh Frydenberg dismissed the speculation that he is a dual citizen, saying his family were stateless when they arrived from Hungary after World War II.
The environment and energy minister told Fairfax Media his grandparents and mother were stateless refugees when they arrived in Australia, in response to a report in The Australian he may have Hungarian citizenship by descent.
Under Hungarian law, anyone born in the country between 1941 and 1945 is automatically a citizen, in a bid to address the plight of stateless Jews who fled the Holocaust, The Australian reports.
Mr Frydenberg's mother was born in Hungary in 1943 and arrived in Australia with her parents when she was seven after spending time in a refugee camp.
Labor open to citizenship audit on one condition
After months of dismissing the idea, the Opposition is indicating it will consider a citizenship audit if the government proposes it.
The prime minister's defence came as Labor leader Bill Shorten announced his party was prepared to cooperate with the government on "an agreed process that brings this issue to an end".
The Opposition Leader has proposed a 'universal disclosure' process to end the squabble over MP citizenship.
"Whatever the ultimate process is, it must adhere to clear principles," Mr Shorten said in a statement.
"It must be accountable to the people through the parliament. It must have a bipartisan agreement prior to implementation. It must be sufficiently robust to give all Australians confidence in the process.
"But it must not be allowed to create more legal problems, or in any way undermine the supremacy of the High Court on these matters."
Both Liberal and Labor politicians have slammed the latest development as 'disturbing' and 'offensive'.
The Opposition has maintained an audit of parliamentarians' citizenship would not end the problem.
"We're yet to be convinced of an audit. We're still very confident our vetting processes are strong, that they are unimpeachable," Deputy Labor Leader Tanya Plibersek told reporters in Sydney on Friday.
"If there was a proposal from the government, we'd look at it," she said.
The government has maintained the High Court is the ultimate authority in determining matters of citizenship.
"I don't believe people are guilty until proved innocent in this country," the Treasurer Scott Morrison said.
"If individual members have issues, then they can raise them, but, you know, we're not getting into these Salem witch trials on citizenship through the media."
has seen former Deputy Prime Minister Barnaby Joyce, Nationals Deputy Leader Fiona Nash, Greens senators Scott Ludlam and Larissa Waters and One Nation's Malcolm Roberts ejected from Parliament.