Malcolm Turnbull has been accused of threatening a Government staffer just as Kevin Rudd’s standing goes on the line in a Senate committee over an old ute.

Treasurer Wayne Swan today demanded Mr Turnbull apologise for what he said were threats in a conversation between the Opposition leader and a key economic advisor to the Prime Minister, Andrew Charlton.

The issue surrounds a friend of Mr Rudd’s, Queensland car dealer John Grant, who supplies the PM with a ute for use in Queensland.

The Opposition plans to use a Senate committee later today to allege that Mr Rudd’s office directly contacted officials involved in the Government's OzCar scheme, set up to help find finance for car dealerships left without funding because of the withdrawal of companies such General Motors finance arm late last year, to help Mr Grant.

Sydney’s Daily Telegraph newspaper this morning claimed there may be a “correspondence trail” that allegedly links the Prime Minister’s office and Treasury officials involved in the scheme.

Mr Rudd, in Parliament, has repeatedly denied any suggestion that he or his office have had contact with Treasury officials over the issue or about Mr Grant.

Mr Turnbull this morning said there was a huge conflict of interest between Mr Rudd and the OzCar scheme if he had tried to help Mr Grant, adding the PM had to resign if it was found he had misled voters.

“If he has misled Parliament deliberately twice, that is a very, very serious offence,” he told Macaquarie Radio.

“The prime minister has to produce all of the correspondence.”

But in a major twist, Mr Swan said it was Mr Turnbull who had to apologise over an incident at the Mid-Winter Ball, a fundraiser held in Canberra on Wednesday evening.

A statement produced by Mr Charlton suggests Mr Turnbull told the staffer to “consider your actions very carefully” over the whole OzCar issue.

Mr Turnbull allegedly said: “Let me just give you some friendly advice. You should not lie to protect your boss.”

Mr Swan said there was a “good Malcolm and a bad Malcolm”, with the conversation an implied threat against Mr Charlton.

He said Mr Turnbull had to produce evidence supporting his claims or apologise to the PM.

“Mr Turnbull must provide that evidence today or apologise for threatening a staff member of the Prime Minister,” he said.

The Senate committee will get under way at 11am WA time.