Referendum ruffles Liberals

Tony Abbott has rebuffed a coalition backbench bid to get him to withdraw his support for recognising local government in the Constitution, but opponents have not given up.

The local government issue, to be voted on in a referendum on the same day as the Federal election, is causing ructions within coalition ranks.

The WA branch of the Liberal Party plans to encourage voters to reject recognition and vote "No" on its how-to-vote cards, defying Mr Abbott.

Liberal MPs seethed in the party room yesterday over the Government's decision to give $10 million to the "Yes" campaign and just $500,000 to the "No" case, urging the Opposition Leader to withdraw his support for the polling day referendum on September 14.

An attempt to give equal funding for the rival campaigns was quashed in the Senate, but opponents have one last chance to overturn the coalition's position at next week's party room meeting.

Despite the backlash, it is understood Mr Abbott will not withdraw the coalition's support for the referendum, which is strongly backed by Nationals MPs and Queensland MPs, who argue it is needed to ensure Federal cash flows directly to councils.