Mr Abbott told a meeting of Coalition MPs in Canberra on Tuesday that the opposition would ''reluctantly'' allow Labor's legislation to scrap the bonus to go through.

It is understood the legislation will come before the House of Representatives later this week.
Labor announced in the budget that from March 1 next year, the baby bonus would be replaced by increase in Family Tax Benefit Part A.

Labor wants to reduce those payments to $2000 for the first child and $1000 for each subsequent child. Labor has also changed the eligibility.

In supporting the axing of the baby bonus, Mr Abbott also defended his paid parental leave scheme, telling the MPs it was a ''pro-family Conservative policy''.

He explained that the ''vast majority'' of modern women were in some form of paid work.

It is understood that Coalition MPs in the room accepted the decision to support the scrapping of the baby bonus, first introduced by the Howard government.

In the meeting, the Coalition also agreed to back Labor's amendments to private health insurance.

Mr Abbott said ''we don't like this'' but said it was necessary in the context of the ''budget emergency''.

MORE TO COME