The federal government will drop its controversial plan to eliminate political party subsidies that are based on the number of votes received during elections, CBC News has learned.

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The government won't proceed with a plan to scrap political party subsidies, Transport Minister John Baird told CBC News on Saturday. ((CBC))

Transport Minister John Baird said Saturday the government has decided not to end the practice of giving all parties $1.95 for each vote they win, an apparent move aimed at appeasing opposition parties and averting the collapse of the government.

"Tomorrow the government will speak more to the fiscal economic statement and how we'll move forward, but we won't be proceeding with those parts," Baird said in an interview with CBC News.

"Perhaps this could be something that could be debated with Canadians at the next election, but simply put it's just not worth going into an election campaign on that issue."

One of a series of measures aimed at reining in government spending, the proposed changes to political party financing were announced by Finance Minister Jim Flaherty during Thursday's fiscal update and had received a resounding rejection by the opposition parties.

Baird said the Conservatives wanted to lead by example by putting a clamp on the taxpayer-funded support for political parties in "this period of economic uncertainty," but that the other parties don't feel the same way.

"I have to tell you, we're all a bit disappointed — tremendously disappointed — that the other parties don't share that desire to lead by example," he said.

Baird's announcement Saturday was another manoeuvre by the Conservatives to stave off — at least temporarily — a Liberal plan to topple the minority government and propose a governing coalition with the New Democrats.   

The Liberals have prepared a motion saying the House of Commons has lost confidence in the Conservatives, their economic strategy is insufficient in the face of the global financial crisis and they've failed to introduce a plan to boost the economy.

Harper reacted Friday by cancelling Monday's opposition day, which the Liberals intended to use to introduce their motion, and rescheduling it for Dec. 8.

He also cancelled a confidence vote on a ways-and-means motion dealing with the fiscal update that had been scheduled for Monday night, which would have given the opposition another chance to bring down the government. Harper's announcement came hours after his spokesman said the party financing issue would be removed from the motion and deferred to a later bill.

The government's about-face on party financing, however, will have no effect on opposition efforts towards a coalition, NDP spokesman Brad Lavigne said Saturday.

"This changes nothing because for the New Democrats, it was never about public financing," Lavigne said.

'The government failed Canadians': NDP

Both Liberal finance critic Scott Brison and NDP House Leader Libby Davies went on record Saturday as saying the motion has little to do with  the government's decision to cut party subsidies, which were brought in as part of election finance reforms in 2003 when political contributions from unions and corporations were banned.

"That's not what it's about," Brison said.

"This is about the economic stimulus," Davies said. "What it's about is recognizing that the government failed Canadians. They did not bring forward the kind of significant economic stimulus that we've seen in all other G7 countries."

Instead of introducing a stimulus package on Thursday, Flaherty used his economic statement to announce spending cuts, including a reduction in the annual taxpayer subsidy to political parties.

Flaherty is expected to make an announcement in Toronto on Sunday, although it was not immediately clear on what.

Harper's parliamentary secretary said Saturday that the opposition parties were in too much of a hurry to impose a coalition government on Canadians.

Power grab alleged

Conservative MP Pierre Poilievre dismissed their attempts as nothing more than an illegitimate power grab.

"In just over 30 days [Finance Minister Jim Flaherty] has got a budget that will come out that will include yet more [economic] stimulus," he told CBC News.

Poilievre said, however, that opposition parties are focused on power, while Harper is looking at the economy.

"By contrast, the Liberals, the separatists and the socialists, all of whom were resoundingly rejected in the last election, want to overturn that election and impose a coalition that they promised they would never entertain," he said.

The Bloc Québécois has ruled out having a spot in any formal coalition, but its members have said they would support a Liberal-NDP coalition as long as it promotes the interests of Quebec.

With files from the Canadian Press