"It was inadvertent, absolutely it was.

"Following that, there was a discussion, and I think the leadership and the shadow cabinet decided to go to the $50 million threshold and that puts into that bracket medium-sized companies."

After making the announcement in Canberra on Tuesday, Mr Shorten faced days of fierce criticism and growing pressure on his leadership from sections of the party.

He moved to partially dump the plans on Friday, saying Labor would not repeal tax cuts for companies with turnovers between $10 million and $50 million.

Opposition leader Bill Shorten backtracked on the tax announcement on Friday, prompting more criticism from the government. Dominic Lorrimer

At a snap shadow cabinet meeting, Labor junked the policy to fully repeal the legislated cuts that would reduce the rate to 25 per cent over a decade and return it to 30 per cent

Instead, it will keep the rates for these firms frozen at the current rate of 27.5 per cent.

They are scheduled to drop to 26 per cent in 2025-26 and to 25 per cent in 2026-27 but Mr Shorten and shadow treasurer Chris Bowen said if elected, Labor would try and legislate to block any further scheduled reduction below 27.5 per cent.


Longman win 'extraordinarily difficult'

Mr Swan said Mr Shorten had earned the right to remain as Labor leader, despite predicting a difficult effort to win this month's Longman byelection.

"Too right he has. He has been spectacularly successful," Mr Swan said.

"Being the opposition leader is just the toughest gig in politics. He has done extraordinarily well as opposition leader and he deserves the opportunity to get out there and take government at the next election."

One Nation is expected to preference the Liberal-National Party at the July 28 byelection, making Labor's task "doable but extraordinarily difficult", Mr Swan said.

Small Business Minister Craig Laundy said the government wanted Labor to go further on its tax backdown.

"It's legislated, so be very clear here: the Labor Party will have to take legislation," he told Sky.

"The Turnbull Coalition plan has passed for businesses up to $50 million. Mathias Cormann keeps working away obviously in the Senate on businesses irrespective of size getting that tax rate, however, they will have to take legislation.

"It's not about whether businesses are making investment decisions now. It's about two very different policy alternatives for small and family business operators to have in the back of their mind."

Mr Laundy said the Coalition wanted lower tax rates for small business but Labor wanted to increase rates over time.