Act founder Sir Roger Douglas has described party leader Rodney Hide's talks with Labour as a joke.
Mr Hide will explain the new relationship at Act's Wellington regional conference today, after agreeing last week to seriously consider the Therapeutic Products and Medicines Bill, which has been on hold while Labour tried to muster up the extra two votes needed to pass it.
Mr Hide agreed to look at the bill in return for Labour's support in the first reading of his private members bill, which passed its first reading last week.
The discussions also began a wider relationship under which Labour would not automatically ignore Act when looking for support for legislation.
Mr Hide said it was not certain that Act would support the Therapeutics Bill, which sets up a transtasman agency for alternative and complementary medicines and which opponents argue will raise costs and gives Australia too much say.
He has written to Minister of Health Pete Hodgson with possible changes "to try and ensure it allows competition and choice".
However, the overtures to Labour have caused confusion. Mr Hide said Act voted on legislation that promoted its core principles, rather than along pure party lines.
Mr Hide's stance has the support of his colleague Heather Roy and Act's former leader Richard Prebble - but Sir Roger said any talk of Act even considering the Therapeutics Bill must be a joke.
"Essentially, what [the bill] is all about is controls and regulations and I thought we were a party of freedom and personal choice. I don't think he's thought through how it relates to his personal principles and the party's principles."
Sir Roger said Act could talk to anybody it liked.
"But this is a Government of control freaks and there's not much point in talking to control freaks. I can't see that there's any common ground."
Mr Hide said MMP necessitated working with people in other parties, as indicated by the grouping of small parties, the Greens, Act, United Future and the Maori Party, who had worked together on issues such as the sedition law and a code of behaviour for MPs.
"I guess I'm a bit different to Roger, in that I actually try and work with everyone.
"What I've never done is sold any of my principles or Act's principles down the river."
Mr Prebble said Act gained more than Labour from the situation.
"Rodney told me Helen Clark had been very friendly to him in the last three months and we all know what that is. There are no greater friends than those in need of votes. All it does is reflect the weakness of the Government. There are more advantages to Act because Act will now be consulted."
He said there was no real difference to Act's approach, which had always been to vote on principle.
"It doesn't mean they would vote on issues of confidence, because we think National would make a better Government on confidence.
"But I don't see the point in opposing measures we support just because it's put forward by Labour."
Heather Roy said little parties were "left behind" and became irrelevant if they didn't participate in the work of Parliament.
"I knew that we were talking to Labour. This was a strategy we'd talked about in caucus and with the party. I don't see it as a betrayal. This is about operating in a smart way to get our principles and policies across."