MALCOLM TURNBULL, PRIME MINISTER: Whose side is Sam on? Not Australia's it would seem. Why are you giving counter surveillance advice to a foreign national closely linked to a foreign government?

JULIE BISHOP, MINISTER FOR FOREIGN AFFAIRS: Senator Sam Dastyari must reveal publicly each and every discussion he had with his Chinese benefactor.

TANYA PLIBERSEK, DEPUTY OPPOSITION LEADER: I wouldn't have wanted to be Sam Dastyari when he got the phone call from Bill Shorten this morning.

DAVID LIPSON, POLITICAL CORRESPONDENT: Sam Dastyari - master of the media, fund raising powerhouse.

SAM DASTYARI, SENATOR: Will you cut the cake with me?

DAVID LIPSON: Fundraising powerhouse

SAM DASTYARI: $50, please donate. We're raising funds for the bus.

DAVID LIPSON: And factional ally of Bill Shorten is embroiled again.

BILL SHORTEN, OPPOSITION LEADER: You've had Sam Dastyari, so I'm feeling your pain. I'm in caucus with him.

MALCOLM TURBULL: This is a very serious issue of national security. Sam Dastyari has a lot of questions to answer and Bill Shorten has even more.

DAVID LIPSON: At issue once more his relationship with Huang Xiangmo.

DYLAN WELCH, ABC JOURNALIST: Dylan Welch from the ABC.

DAVID LIPSON: A billionaire property developer with links to the Chinese Communist Party who donated big money to both major parties.

DYLAN WELCH: I wanted to ask Mr Huang, why does he make so many political donations in Australia?

HUANG XIANGMO: (VIA INTERPRETER) He wants to make appointments. When he is going to make the appointment with you?

DYLAN WELCH: I will give you my card.

DAVID LIPSON: And whose company reportedly settled a legal bill for senator Dastyari worth thousands of dollars.

SAM DASTYARI: Good to be here, great, how are you?

DAVID LIPSON: It wasn't his only indiscretion over payments.

SAM DASTYARI: I asked them to pay it because I didn't want to pay it.

DAVID LIPSON: Last year the Senator lost his frontbench position after asking another Chinese company to pay his $1600 staff travel bill.

SAM DASTYARI: Today I spoke to my leader, Bill Shorten and offered my resignation from the frontbench, which he accepted.

DAVID LIPSON: The resignation followed serious questions about whether foreign influence prompted him to make statements that contradicted Labor's policy on the South China Sea.

LEIGH SALES: So, senator, can we just confirm for accuracy, did you actually say the South China Sea is China's own affair on this issue, Australia should remain neutral and respect China's decision? Did you actually say that, yes or no?

SAM DASTYARI: I support the Labor Party position. No, no, no.

REPORTER: You were paying the donors.

SAM DASTYARI: No, I support the Labor Party position on the issue of the South China Sea.

DAVID LIPSON: The senator's comments about the South China Sea were made alongside Mr Huang at a makeshift press conference arranged only for Chinese media and at the time reported only in Mandarin. In an interview for Australian Story in July, Senator Dastyari admitted he had misspoken but suggested his comments had been somewhat unclear.

SAM DASTYARI: It was later reported that in a very garbled answer I said something along the lines of, that's a matter for China.

DAVID LIPSON: Now the full audio of that press conference has been obtained by Australian Story and it's unambiguous.

SAM DASTYARI: The Chinese integrity of its borders is a matter for China. And the role that Australia should be playing as a friend is to know that with the several-thousand years of history, thousands of years of history, where it is and isn't our place to be involved.

And as a supporter of China, and a friend of China, the Australian Labor party needs to play an important role in maintaining that relationship. And the best way of maintaining that relationship is knowing when it is and isn't our place to be involved.

DAVID LIPSON: Fairfax Media today outlined details of another meeting between Sam Dastyari and Mr Huang at the billionaire's Sydney mansion last year. The report claims the Senator warned the developer they should leave their phones inside and speak in the garden, because of concerns Mr Huang's phone was tapped.

PETER JENNINGS, AUSTRALIAN STRATEGIC POLICY INSTITUTE: The allegations seem to suggest that Sam as an Australian politician told a Chinese national that the Chinese national was being surveyed by Australian intelligence. I think that is a very serious allegation.

DAVID LIPSON: Peter Jennings formally worked as security adviser at the highest levels of government.

PETER JENNINGS: As a public servant, which I used to be, if you found yourself in a situation where you were seen to be collaborating with a foreign power, you know, and endangering the operations of the Australian intelligence community, there would be you know, career-ceasing implications that would flow from that. And, quite possibly there would be criminal sanctions as well. I think it puts Dastyari into frankly an impossible position as far as continuing his political role is concerned.

GEORGE BRANDIS, ATTORNEY-GENERAL: Why would anyone acting in good faith warn a benefactor to have a conversation in circumstances that are only consistent with engaging in counter surveillance activity? Why would an innocent person do that? What was he trying to hide?

TANYA PLIBERSEK: Bill has made it very clear that Sam's already had one breach of judgement, this is his second breach of judgement and there better not be a third one.

DAVID LIPSON: That warning was issued before tonight's audio leak came to light. We will see if it amounts to a third breach of judgement in Bill Shorten's eyes. Sam Dastyari has been steadily rebuilding his reputation and since February held a junior position in Labor's leadership team. Now he's under more pressure than ever.

For a politician who is seldom shy of media attention, the Senator has been hard to find today. 7:30 was told this morning he was keeping a low profile. Later we were told he was attending a funeral in Sydney. It was left to Labor's Deputy Leader to face the cameras.

TANYA PLIBERSEK: It's interesting to ask where this story has come from. I don't believe it's come from our own security and intelligence agencies. So, the next question is where has it come from?

DAVID LIPSON: Senator Dastyari issued a statement, saying, " I have never been briefed by any security agency, or received any classified information about any matter, ever.

I 've never passed on any protected security information - I've never been in possession of any.

I reject any assertion that I did anything other than put to Mr Huang gossip being spread by journalists."

There was no denial he warned Mr Huang to leave his phone inside.

MALCOLM TURNBULL: Whose side is he on? Is he on the side of the agencies that keep us safe or is he on the side of a foreign government?