Prime Minister Julia Gillard's tenuous grip on power weakened on Saturday when a key independent lawmaker withdrew his support for her minority government.
Lawmaker Andrew Wilkie announced he had ended his 17-month-old agreement with the center-left Labor Party government after Gillard broke a promise to him to introduce legislation that would create new controls on slot machines.
His defection leaves Gillard with control of 75 of the 150 seats in House of Representatives, the lower chamber where parties form governments. This means Gillard could lose power if Labor loses a single by-election and the opposition unites lawmakers outside her coalition.
"I regard the prime minister to be in breach of the written agreement she signed, leaving me no option but to honor my word and end my current relationship with her government," Wilkie told reporters.
"I'm very let down by the prime minister ... and I think a lot of Australians are feeling very let down by the prime minister," he added.
Wilkie wants legislation that would force gamblers to set a limit on how much they are prepared to lose before they start playing slot machines. The aim is to reduce the losses of gambling addicts.
Gillard announced Saturday that she does not plan to introduce the new slot machine technology until 2016 _ two years later than she had promised Wilkie.
Gillard announced a compromise plan on Saturday in which limited trials of so-called pre-commitment technology would begin next year. In addition, automatic teller machines in slot machine venues would be limited to maximum withdrawals of $250.
Gillard said Wilkie's plan would not have been endorsed by Parliament.
"We need people working together on the same page to get change, and the package of reforms we're announcing today I believe will get that support in the Parliament," Gillard told reporters.
With polls pointing to the conservative opposition winning elections due next year, there are serious doubts about whether the changes will ever take place.
Slot machine operators mounted a multimillion-dollar advertising campaign against the reforms, which they claim would cost sporting and social clubs billions of dollars in lost revenue.
Gillard managed to form a government after elections in 2010 when three independent lawmakers and a legislator from the minor Greens party agreed to support the 72 Labor lawmakers in the House of Representatives, creating a majority of 76.
Wilkie's bargaining power diminished in November last year when an opposition lawmaker agreed to become House of Representatives speaker, replacing a Labor lawmaker. Because speakers can vote only to break a tie, the change effectively gave Gillard an additional vote on most legislation and a two-seat buffer.