Premier Morris Iemma has been issued with an ultimatum that could see the treasurer quit before the end of the year.
Michael Costa has threatened to quit within the next ten weeks unless the Iemma government adopts his new mini-budget.
But there's widespread controversy over the budget reforms which call for job cuts for bureaucrats, a restructure of the public sector and the privatisation of rail maintenance and ferries.
The Opposition says the NSW State Government is imploding.
Liberal leader Barry O’Farrell says it's just childish behaviour from an increasingly dysfunctional government.
“Labor’s at war with itself.”
“Morris Iemma can’t rely on the support of his own MPs,” he said.
“Decisions are based on trying to sure-up Mr Iemma’s weak leadership.”
“Putting political interest ahead of what’s best for this state is why people no longer trust this government.”