In the latest Investigate Magazine Ms Rankin speaks strongly against the 2007 law change which removed the defence of reasonable force in child abuse cases.
The magazine hit shops as a campaign by opponents of the law urging voters to vote "No" to the question "should a smack as part of good parental correction be a criminal offence in New Zealand?" was launched yesterday. Ms Rankin did not attend the launch despite earlier being listed as appearing. Organisers said her inclusion was an error.
Prime Minister John Key previously publicly warned against Ms Rankin campaigning on the issue given the commission holds an opposite view, but yesterday afternoon said she had not crossed that line.
Mr Dunne, who was responsible for the Families Commission being set up as part of a post-2002 election deal with Labour, disagreed.
"She's certainly taking a very clear position... She's taking that in opposition to the Families Commission to which she has been appointed," he told NZPA.
"If she wants to take a view campaigning for that referendum as she's perfectly entitled to, then she stands down.
"You can't have your cake and eat it too. This is exactly the sort of thing that I speculated at the time of her appointment."
If she did not, then Mr Key should act, Mr Dunne said.
"I would have thought that the Prime Minister's view was very clear previously about what his expectations were and I think he now needs to honour those.... He's got to live up to the statements he made previously."
Mr Dunne said the comments in Investigate would be interpreted as campaigning for a particular side of the referendum.
In the magazine Ms Rankin said the legislation had had a "huge" psychological effect on New Zealanders.
"I think parents are afraid of how to discipline their children now."
She said parents were being reported to police for incidents such as grabbing a child's arm. Damage was done even if charges were not laid.
"Parents are scared, because of the investigation itself -- the police coming around, interviewing the children, interviewing you, they have a lot of powers to do that before they ever charge and that's a hugely traumatic thing for a family."
Agencies failed to get involved in cases of serious abuse while minor smacks were followed up, she claimed.
On child abuse, Ms Rankin said sentencing was pathetic.
"You abuse a baby but you can go on and have other babies and they'll stay in your care and CYF (Child Youth and Family) will watch and see what happens."
She also questioned whether conditions should be put on benefits.
"If you have a welfare system that supports people not participating in society and families not being strengthened that's just a major contribution to us going down the wrong path."
Mr Key told reporters he had a quick read of the article and was relaxed about it.
"I don't think there's anything in the article I didn't know about Christine Rankin's views prior to reading that article. I don't think its particularly provocative.
"I made it clear though that I wouldn't want to see her campaigning on the no vote and I think she's honoured that, she wasn't there today at the (launch)."
Bob McCoskrie, director of Family First NZ which is leading the "vote no" campaign, said Ms Rankin was being muzzled.
Mr Key said she would be able to speak out on issues, but when the commission reached a position it spoke collectively.
"I don't think we should be absolutely pedantic about that. From time to time she might make the odd comment but there's a big difference between that and broad characterisation of events and her actually actively campaigning. That would be unacceptable."
Asked for comment on Mr Dunne's remarks, a spokesman for Mr Key said his position had not changed.
Social Development Minister Paula Bennett said she shared Mr Key's position.
"Mr Dunne is entitled to his view on what constitutes campaigning. It was clear to me as it would be to others reading the Investigate interview that it was Christine Rankin speaking as Christine Rankin," she said through a spokeswoman.
