National Party leader Judith Collins says Green Party co-leader James Shaw should resign over his mistake approving a $11.7 million grant for Taranaki Green School.
"I'm surprised he didn't resign yesterday. I think he should," Collins said.
Shaw also held up the process of releasing the list of government grants for "shovel-ready projects", she said.
"It's not just that he advocated for a particular Green School that doesn't even have education registration to be a school, but that he's actually held up all these projects on the basis that he was holding the rest of the Government basically to ransom," Collins said.
"This is totally unacceptable."
Collins said about 400 people lost their jobs every day last week and approving the projects was important to ensure organisations had certainty about upcoming work.
Shaw has apologised for his mistake in approving the grant to the private school, despite the Green Party having a policy against public funding for private schools.
He hoped the grant might be treated as a loan.
Taranaki Green School chief executive Chris Edwards said the money was never meant to be a grant.
"There was a small portion that was going to be a grant and the other elements were essentially loans," Edwards said.
Collins said other Taranaki schools badly needed more funding and she supported more funding for public schools and integrated schools.