Prime Minister Helen Clark has met Minister of Foreign Affairs Winston Peters and says he retains her confidence.
Miss Clark says the pair earlier had a cordial conversation covering a number of matters and Mr Peters continues to assure her that nothing unlawful has occurred in his handling of donations to New Zealand First.
During a stormy session in Parliament on Tuesday, Mr Peters again rejected the allegations, which he described as a shameful episode of dirty politics.
He refused to address questions on the donations allegations, despite promising to answer his critics in Parliament.
Mr Peters was given leave of the House to make a personal statement, but failed to address any of the questions that remain about the way his party has handled donations
Miss Clark says she has made it clear throughout the allegations that she accepts the word of an MP as his or her bond unless she has reason to doubt it - and she has been given no reason to doubt Mr Peters' word.
Miss Clark says she will seek an assurance that his party's actions have been lawful.
After the meeting, Mr Peters told the media he had put the hysteria of the past two weeks to rest.
He says speculation about the confidence-and-supply agreement between New Zealand First and the Labour Party is nonsense.