Key Points:

National Party leader John Key is in the middle of another controversy after admitting today he told the Maori Party he was prepared to drop a policy to abolish the Maori seats in Parliament.

"They've raised it with us on numerous occasions and I've made it quite clear to them it's not a bottom line for us," he told reporters on the campaign trail in Dunedin.

He has not previously said that, and has disagreed with Maori Party co-leader Pita Sharples' account of a private meeting at which Dr Sharples says Mr Key gave him an assurance the policy would be dropped if National needed the Maori Party's support after the election.

When he was asked about that during Tuesday night's leaders debate on TV One, Mr Key said: "I've never given that assurance. There is no formal agreement. I'm sorry, but he's got it wrong."

Earlier today Prime Minister Helen Clark said Mr Key's comment during the debate was "an outright fib" and Labour is sure to use the latest development to again claim National's leader cannot be trusted.

Before today's admission, a senior Maori Party staff member backed Dr Sharples' account of the meeting with Mr Key and said National's deputy leader, Bill English, had attended it as well.

Mr English told NZPA he backed Mr Key's version of events - there was no agreement.

"John's position has been consistent that he will not negotiate with anyone before the election," Mr English told NZPA.

The Maori Party has a policy of entrenching the seats in law. It says they should never be abolished without Maori consent.

National's policy is that a process to abolish them should begin when all historic Treaty claims have been settled, which it hopes to achieve by 2014.

The fundamental difference on this has been seen as a serious problem if National needs to negotiate with the Maori Party after the election to gain its support for a majority in Parliament.

Labour has been running a strategy of trying to show Mr Key is "slippery" with the truth, and attacked him in Parliament last month when he admitted owning more Tranz Rail shares than he had previously acknowledged.

Mr Key held some of the shares while he was asking questions in Parliament about the railways.

He says he sold them all as soon as he knew a political issue was involved.

- NZPA