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The taxpayer has so far unwittingly chipped in at least $320,000 for MPs embroiled in lawsuits - including $150,000 for two MPs to defend themselves in legal spats with another MP, NZ First leader Winston Peters.
Both National MP David Carter and former Act New Zealand MP Ken Shirley yesterday confirmed they received public money for legal costs after being sued for defamation by Winston Peters relating to an inquiry into alleged corruption in the scampi industry in 2004.
Parliamentary Services paid $114,000 of Mr Carter's legal bills and up to $40,000 for Mr Shirley's.
Mr Carter later reimbursed $5000 after receiving $19,000 in costs from Mr Peters.
Mr Peters' costs in the cases would not qualify for taxpayer funding because it cannot be used to take lawsuits against others.
Mr Shirley said he had also received a further amount of up to $50,000 for a 2002 defamation action against him by a helicopter pilot and West Coast police officers over allegations about deer poachers.
His total bills in that case were about $150,000.
Neither had revealed public funds were used at the time of the cases.
National MP Nick Smith yesterday also provided further details about funding for the defamation case against him by Osmose, saying Parliamentary Services had so far contributed $122,000 toward his costs of $274,000.
The amounts were provided after the Herald revealed the taxpayer had been footing some MPs' legal costs since a little-known change to the rules in 2001 allowed public funds to be used to defend them.
The revelations have led to calls for greater transparency when such funding is approved.
Currently, there is no requirement to divulge it because Parliamentary Services is not covered by the Official Information Act.
The contributions come out of funds allocated to each party's leaders' office and must be approved by the party leader and the Speaker.
Labour MP Trevor Mallard said there should be no provision to reimburse MPs for such legal costs at all, especially where they were involved in spats with each other.
"It seems extraordinarily stupid for taxpayers to be funding court cases between MPs, as in this case."
He said MPs were already in a special position, as they had the protection of privilege to make potentially defamatory statements in Parliament.
However, Prime Minister John Key said it was a legitimate use of taxpayers' money within the limits set down by the Speaker.
He said he would not object to opening the books further.
"There's nothing to hide here.
If someone is going to use taxpayers' resources to defend a legal case then I think taxpayers are entitled to know what that is."
Speaker Lockwood Smith said he had an "open mind" about whether that should be required or left to the discretion of each party leader and would put the issue on the agenda for the next meeting of the Parliamentary Services Commission.
Yesterday Mr Peters told 3News that the use of public money for Mr Carter's defence was "rotten" and it should be paid back.