Mr Tripodi, the Finance and Infrastructure Minister, admitted yesterday that he had consulted Mr Di Leo, a former chief operating officer of Graincorp, before ripping into the minister attempting to mandate the change, Tony Kelly, in a one-hour debate in cabinet.

But Mr Tripodi denies his friendship was responsible for his position on the issue.

Mr Di Leo, who was put on the board of the Port Kembla Ports Corporation last year by the former treasurer, Michael Costa, while Mr Tripodi was ports minister, also said he had "no comment at all" when asked how many conversations he had with Mr Tripodi on the issue yesterday.

"You're not serious, are you?" Mr Tripodi said when contacted by the Sydney Morning Herald.

"I talk to lots of people in the industry to better understand it.

"And the arguments I offered were issues about the cost of food.

"I consulted lots of people about this issue."

As minister for regulatory reform, he said, he "consulted broadly on all regulatory issues".

The Iemma government promised during the 2007 election campaign it would mandate that 10pc of petrol in NSW would contain ethanol by 2011.

At the time, there was some controversy over the decision with the manufacturer of ethanol blended petrol, Manildra, having given more than $1 million to NSW and federal political parties of both major persuasions.

But in cabinet last week, the Government went further, deciding that 4pc of unleaded petrol sold in NSW from next year would have to be E10 petrol, with that figure rising to 6pc in 2010.

And in 2011, regular unleaded would no longer be able to be sold and would be replaced everywhere with E10, giving motorists only the choice of E10 and premium unleaded.