Social Development Minister Paula Bennett has confirmed she is working with New Zealand First to provide extra assistance to grandparents raising their grandchildren.
Prime Minister John Key has used the collaboration as an example of talks the Government has had with New Zealand First about possible deals.
Mrs Bennett says she approached New Zealand First MP Tracey Martin about how the Government could pick up some of the ideas raised in her member's bill, which proposes allowing grandparent carers to receive clothing allowances.
She says she had already announced before Mrs Martin's bill was introduced that she was looking at providing extra funding for those grandparents.
Mr Key said the Government would put in $35 million over four years and Ms Martin's legislation will disappear but effectively be covered through the Government's proposal.
Earlier on Tuesday, New Zealand First leader Winston Peters dismissed suggestions there have been discussions, saying he knows nothing about them.
Mr Peters said he had not had any conversation with Mr Key of that type at any time in the past as leader of New Zealand First and the head of the caucus, other than the "mere rats and mice stuff that happens every day in politics."
The prime minister has said the National Party would consider working with New Zealand First in 2014, before the next general election.
New Zealand First says it would not support a government which is selling the country's electricity generators.