The Ontario government is backing away from a controversial bill designed to help a construction firm that has donated tens of thousands of dollars to the party.

Premier Kathleen Wynne surprised the legislature during Question Period on Wednesday when she said Bill 74, which would free EllisDon from a 1958 labour agreement that required it to use only unionized workers, is no longer necessary after a court ruled that the labour agreement will not be enforced.

"I believe this bill is no longer needed. We will not be supporting it," Ms. Wynne said under questioning from New Democrat Leader Andrea Horwath. "I will not be supporting it, assuming the decision is not appealed."

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Last year, the Labour Relations Board upheld the 1958 agreement, but gave EllisDon a two-year grace period to press the government to change the rules. Both Ms. Wynne's office and Labour Minister Yasir Naqvi were lobbied on the matter, they say.

Progressive Conservative MPP Monte McNaughton moved Bill 74. The Liberals included it in a package of legislation they will fast-track, with the help of the Tories.

A divisional court last week overturned the Labour Relations Board decision. As a result, Ms. Wynne said, the aims of the bill have been achieved. As she spoke in the House, the Tories shouted in protest.

The NDP has attacked the bill, which they say was crafted to help a major donor to both parties. EllisDon gave tens of thousands to both the Liberals and Tories this year and last. The company gave the NDP about $1,900.

The Liberals and Tories have denied the NDP's accusations, saying they supported the bill because the 1958 agreement puts EllisDon at a competitive disadvantage against foreign companies.