Liberal Democrats have denied the party is planning to accept money in return for supporting the re-drawing of the electoral map in a way that would help the Tories win the next election.
On Monday the Financial Times reported that the Conservatives were hoping to tempt Nick Clegg to reverse his veto of the boundary review in exchange for the introduction of state funding for political parties.
However speaking on BBC Radio 4's Today programme. Lib Dem Scotland secretary Michael Moore, said "there is no prospect of any kind of deal like that".
"The Conservatives turned their backs on House of Lords reform we made clear we could no longer support boundary commission changes nothing has changed about that."
Opposition parties receive state funding and entering government hit the Lib Dems hard, with the party losing the £1.75m it received annually leading to heavy job losses at the party's headquarters.
Clegg decided to veto the boundary review after David Cameron was unable to force his backbenchers to support House of Lords reform.
Under the terms of the now dead review, the number of MPs would be cut from 650 to 600 and the re-drawn map would have possibly benefited the Tories to the tune of 20 extra seats.
The review was seen by many as crucial to the prime minister's hopes of securing an overal majority at the next election.
Olly Grender, the Lib Dem strategist who until recently was the deputy prime minister's press secretary said: "That LibDems in a period of austerity would take state funding in exchange for more Tory seats beggars belief."
A deal would also run contrary to Cameron's past rejection of state funding. He told the House of Commons in September: "I am not in favour of extending state funding.
"I think that it is very important that all political parties work hard to attract members and donations. Frankly, when we get those donations we pay credit to people for funding political parties, which is in the public interest."
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