Prime Minister Julia Gillard is refusing to bow to pressure to redesign the mining tax despite the Greens threatening to block part of the Government's $1 billion jobs package.
The standoff comes just days after the Greens ended their formal agreement with Labor, citing a string of government decisions including its stance on the minerals resource rent tax (MRRT).
Part of the Government's plan to protect manufacturing jobs is to be funded by scrapping research and development tax breaks for companies with an annual turnover of more than $20 billion.
Greens deputy leader Adam Bandt has described the move as a "naked cash grab", saying his party will not support it unless the Government gives ground on the mining tax.
"If the Government and the industry want to sit down and have discussions about the integrity of the research and development system and whether it needs any changes, we're always happy to do that," Mr Bandt told The World Today.
"But if it's about cutting funds to research and development to make up for a failing mining tax, we won't be supporting it."
The mining tax raised just $126 million in its first six months, well short of the projected $2 billion forecast for the 2012-13 financial year.
The Government is in negotiations with the states about how to deal with the issue of mining royalties, but has ruled out changing the design of the tax despite pressure from the Greens.
Ms Gillard has accused the Greens of taking a hypocritical approach to the issue, given that mining companies currently benefit from the research and development tax breaks that would be scaled back under Labor's jobs plan.
"From what the Greens political party is currently saying, we've got the spectre of them going into the Parliament to vote to protect the tax breaks of some of Australia's biggest companies - including mining companies," Ms Gillard told reporters in Adelaide.
"Now, how does this add up? On the one hand they... think mining companies should pay more tax, and then apparently they're going to walk into the Parliament... to keep the tax breaks for mining companies.
"I'll let the Greens political party explain that contradiction if they're able to do so."
When put to Mr Bandt, he replied: "We're going to see more and more cuts as budget time approaches as Labor tries to make up for its failed mining tax, whether it is from universities, whether it is from single parents, whether it is from hospitals or now from research and development."
"This is a naked cash grab to make up for the fact that they let the big miners write the mining tax."
The Government says the Greens' position on the legislation only matters if the Coalition decides to oppose the jobs plan, something it is threatening to do.
Opposition industry spokeswoman Sophie Mirabella has slammed the Government for refusing to provide a briefing on the new jobs plan.
"What is the government hiding? I know they've received criticism from their own department which did not endorse the financial underpinnings of the package," she told ABC News.
"They need to inject some credibility. They need to be able to release financial modelling that underpins the actual statements.
"It beggars belief that the Minister is either so arrogant or so afraid that he won't even organise a briefing."
Ms Gillard says the Coalition's threat to vote against the legislation would mean voting against local jobs.
"In some ways that's not surprising because they've marched into the Parliament and voted against Australian jobs in the past," Ms Gillard said.
"There will come a day of voting in Parliament, and Mr Abbott will truly have to say to the Australian people is he intending to vote against Australian jobs?"