Anger among National Party MPs at banks' treatment of drought-stricken farmers is creating dangerous divisions in Cabinet, threatening further instability for the Abbott government.

National Party sources have confirmed the Coalition is straining over the issue of farmers being left destitute by banks, and National's Whip Barry O'Sullivan told Fairfax Media he was willing to cross party lines to protect his constituents.

Agriculture Minister Barnaby Joyce inspects the wool at the Morrison family farm at Royalla, near Canberra. He says there's not the numbers for a rural development bank. Credit:AAP

Illustrating the anger, Queensland MP Robbie Katter, son of federal independent Bob Katter, said: "If (Agriculture Minister) Barnaby Joyce is not willing to cross the floor over this then he values his job in cabinet more than the farmers' livelihoods."

The dispute about debt-stricken farmers is flaring at a time when internal debate about the power of the Prime Minister's office and Coalition recriminations about the failure to sell Budget measures has dominated headlines.