08/09/2016 9:40 AM AEST | Updated 08/09/2016 12:25 PM AEST

Government Still Fuming After Dastyari Scalp: 'He Quit For The Wrong Reason'

The Coalition is still on the warpath.

Wolter Peeters, Fairfax
Colleagues of Labor Senator Sam Dastyari say he has done the

CANBERRA -- Labor insists the Sam Dastyari Chinese gift scandal is now over with his resignation from the frontbench, but Turnbull Government is now attempting to turn the heat on the Opposition Leader Bill Shorten over his role in the affair.

After a week of controversy, the Senator stepped down late Wednesday from his role as Leader of Opposition Business in the Senate, saying he'd become too much of a distraction to his Labor colleagues.

But senior ministers in the Turnbull Government are not content with the fresh political scalp.

"Sam Dastyari quit for the wrong reason," Leader of the House, Christopher Pyne told RN Breakfast.

"He should not have quit because it was a distraction."

"He should have quit because it was the wrong thing for him to do to have his personal debts paid by Chinese business people."

Senator Dastyari has stressed repeatedly -- including in a train wreck 25 minute "ask me anything" press conference -- that he'd done the wrong thing in accepting payments from companies linked to the Chinese government, but has failed to explain why the companies paid his relatively small personal debts and why he was reported going against Labor and Australian policy in supporting China's position in the South China Sea dispute.

Wolter Peeters, Fairfax
Labor Senator Sam Dastyari exits the opposition frontbench

Regardless, the federal opposition is seeking clean air.

"It is the end of it. It has been dealt with," Shadow Attorney-General Mark Dreyfus has told the ABC's AM program."

"No one has pointed to me there a breach of the rules. He complied with the rules in relation to disclosure."

"No one, still less, is anyone suggesting he broke the law."

It's become a leadership issue for the Turnbull Government. Bill Shorten's leadership that is.

"Bill Shorten was the one who failed to act on Sam Dastyari," the Federal Treasurer Scott Morrison told reporters in Sydney.

"Mr Shorten should have taken third party advice to inform himself of the facts of this matter and then come to a conclusion whether it was appropriate for.. Senator Dastyari to remain in his position."

"He didn't do that. He just had a cup of tea, said 'it's alright Sam, we will just press on, we will bludgeon this out and you watch they will all back off,'" Morrison said.

"But what happened was, the political heat got a bit high, so Sam Dastyari fell on his sword."

"So it shows a pretty shoddy process from Mr Shorten."

In turn, Labor is trying to pressure the Foreign Minister Julie Bishop over $500,000 in declared donations to the WA branch of the Liberal Party from Chinese Australia businessmen with links to the Chinese Government.

"That should raise questions about accountability there," Dreyfus said. "What steps has the Foreign Minister of Australia taken to ensure there is not any conflict of interest, that she is not being influenced."

"It has been pointed out that Julie Bishop has accepted an iPad, airfares, accommodation from a Chinese owned company in addition to these donations."

The Foreign Minister has rejected the comparison.

"There is absolutely no correlation between political donations from in some cases Australian Chinese residents and the circumstances that Sam Dastyari found himself in, touting for a personal payment from another entity," Ms Bishop told reporters in Berlin.

The Shadow Attorney General admits it is "not clear" what exactly Senator Dastyari said to Chinese media about the South China Sea dispute, but says it is now clear that he back Labor's policy on the issue.

Amid growing calls for reform of political donation rules, the Federal Treasurer has indicated the parliament's Joint Standing Committee on Electoral Matters is where donations should be discussed.

"There is a spirit, I think, of discussion and dialogue on that committee which is the appropriate place for that to occur," Morrison told reporters in Sydney.

"And they will pursue this matter as they see fit and I'm sure if the Special Minister of State has any suggestions for them, then they will be more than happy to look at that."

Christopher Pyne has indicated that the Prime Minister may soon have something to say.

"You'll have to wait and see when Malcolm returns from overseas how we respond to that issue," Pyne said.

Meantime, Sam Dastyari is taking solace in his supporters and took to Facebook to praise their efforts in cheering him up.

Senator Dastyari has pulled out of a scheduled appearance at a book launch Thursday night in Sydney.