Tony Abbott has given his strongest indication he will not back Colin Barnett's push to see WA given a greater share of GST payments.
But the Federal Opposition Leader said he would like to see more transparency in the way GST payments were handed out to the States, saying the current system was akin to a "black box".
Mr Abbott said he applauded Mr Barnett for campaigning for his State, but warned it would be his job as prime minister to govern for the whole country.
"Now my job is to be a national leader, not just a parochial one," Mr Abbott said.
"What I will be doing is carefully considering the national interest, not the interest of any particular State.
Earlier this week Mr Barnett issued an extraordinary warning that he might withhold WA Liberal campaign funds from the national branch of the Liberal Party if Mr Abbott did not commit to handing more GST cash to WA.
The stance threatened to divide WA Federal Liberal MPs, who risked being forced to take sides in a fight between Mr Barnett and Mr Abbott.
Pushed on Wednesday about what power he might have to withhold State party funding, Mr Barnett attempted to soften his threat.
"It's not my role and I've never said that, I've never said I would withhold campaign funding," Mr Barnett said.
Liberal Party sources said Mr Barnett's threat was an empty one because he was not an office holder with power to withhold funds."It's silly nonsense," one senior figure said. "He can't exercise his promise. Colin's got no influence whatsoever on funding."