LABOR frontbenchers have accused the Coalition of being part of ''a conspiracy to bring down the government'' and have likened the James Ashby sexual harassment case to Watergate, as the government considers options for an inquiry or legal action.
Crossbench MPs said they would back an inquiry when it became clear whether Mr Ashby was going to lodge an appeal against Wednesday's federal court judgment that threw out his sexual harassment claim against former speaker Peter Slipper as a politically motivated abuse of process, or after any appeal was heard.
But the Coalition accused Labor of ''hyperventilating'' and backed the former Howard government minister and Liberal National Party candidate Mal Brough who was named in the scathing Federal Court judgment that threw out Mr Ashby's sexual harassment claim.
The Labor frontbencher Mike Kelly said ''this is a huge story, this has all the hallmarks of an Australian Watergate''.
The manager of government business, Anthony Albanese, said ''this was a conspiracy, politically motivated, to advance the interests of the LNP and damage Peter Slipper in order to damage the government''.
The government is demanding Mr Brough be disendorsed as the LNP candidate for Mr Slipper's seat of Fisher and that the Coalition Leader, Tony Abbott, give a ''full explanation'' of any involvement of senior Coalition figures in the case.
But the shadow attorney-general, Senator George Brandis, said ''there is no possibility whatever that Mr Brough will be disendorsed''.
And the shadow treasurer, Joe Hockey, said Mr Brough was ''a man of great integrity''.
The government refused to be drawn on what kind of an inquiry it was considering or on what grounds legal action could possibly be taken.
Mr Albanese pointed to evidence that Mr Ashby and another staffer had ''surreptitiously' copied and sent extracts from Mr Slipper's diary to Mr Brough and the News Ltd journalist Steve Lewis.
''If a journalist asks one of my staff to give them copies of my diary without my authorisation I regard that as taking my property … if someone unbeknownst to you downloaded your diary and gave it to someone who sought to do you damage that would be … a matter for the police … I would regard that as theft of my property,'' he said.
But he did not say whether the government or anyone else would be making a complaint.
The independent MP Tony Windsor said that after an appeal was determined ''there does seem to be grounds to have a real look at how democratic processes could be subjected to this''.
His fellow independent Rob Oakeshott said he would also consider an inquiry then.
And the Greens leader, Senator Christine Milne, said she thought the issue was ''very serious'' and was a good example of why the Greens were pushing for a federal integrity commissioner.
On Thursday night Mr Abbott's office denied that the office had begun drafting a press statement in response to the Ashby sexual harassment allegations the night before they became public - something that could cast doubt on the Coalition's claim to have had no prior knowledge.
The metadata on the press release sent to the media shows it was created at 11.32pm on Friday, April 20. Mr Abbott said the first he knew about it was Saturday morning.
Mr Abbott's office showed some other documents that suggested the time stamps on its computer server had been malfunctioning at the time.
The story Ashby campaign an Australian version of Watergate - Labor first appeared on The Sydney Morning Herald.