Parliament on Tuesday agreed to establish an ad hoc committee to investigate party funding.
No party objected when ANC Chief Whip Jackson Mthembu read the motion to establish the committee.
The effective functioning of political parties was fundamental to the promotion of constitutional democracy in South Africa, he said.
"Political parties require adequate funding in order to perform their functions and enhance democracy. The manner and transparency of such funding are paramount in the context of building public confidence in the political system," he said.
The committee would inquire into and make recommendations about regulating funding for political parties represented in Parliament and provincial legislatures, and introduce amended legislation if necessary.
It would consider a model of public and private funding for political parties and look at investment entities owned by political parties.
The committee would consist of six ANC members, two DA members, one EFF, and two from the other parties. They would report back to Parliament by November 30.
Last month, Mthembu announced the ANC wanted increased public funding for political parties. He was concerned about the perceptions of undue influence and corruption fuelled by the lack of transparency regarding private funding.
He said the R150m in public money that was allocated to the parties represented in Parliament was a pittance.