The Marsden Fund Council will no longer allow its panellists to apply for grants, Research, Science and Technology Minister Steve Maharey told parliament today.
"To avoid any perception of conflict of interest, the [Marsden] council agreed recently to prevent panel members to apply for funding from next year," he said.
However, he also said he had "total faith" in the Marsden Fund and the move was intended to counter a perception not a reality.
"The fund is governed by strict conflict of interest procedures to ensure panel members have no involvement," he said.
The fund had been embroiled in controversy after opposition criticism when nine of the panellists judging the awards given $6m of funding themselves.
Corruption watchdog Transparency International New Zealand expressed concerns over the adequacy about the processes used to avoid conflict of interest.
Prime Minister Helen Clark's husband Peter Davis received a $600,000 award for a three-year research project while a panellist for the fund.
Professor Davis had told the fund he had a grant application in the pipeline when he was asked to join the panel.
Mr Maharey said both the prime minister and himself had total confidence in the practices of the fund.
"I am convinced the Marsden fund is absolutely robust and has been since the honourable Simon Upton launch the fund."