TONY Abbott has slammed reports that he suggested a go-it-alone invasion of Iraq to fight Islamic State as “absolutely fanciful”.

Mr Abbott and his senior ministers were in damage control following a report that the Prime Minister suggested a unilateral invasion of Iraq to “stunned” Defence officials.

The Prime Minister responded vigorously to the allegations today in Darwin amid claims that Defence officials had to talk him out of the putting 3500 troops on the ground to fight terrorists.

ANDREW BOLT’S BLOG: This story is destroyed by key factual error

CONTROVERSIAL CALL: PM suggested Iraq invasion — report

The Weekend Australian’s publication of a lengthy investigation into the Prime Minister and his powerful chief of staff Peta Credlin, prepared by Walkley Award winning journalist John Lyons, also claimed Ms Credlin chaired meetings of the expenditure review committee and played an influential role in the formulation of the May budget.

But speaking in Darwin, the Prime Minister said the story “as reported was false.”

“The story that I read today was fanciful, absolutely fanciful,’’ Mr Abbott said.

“I rang the (Chief of the Defence Force) as you would expect, because if any such discussions had ever taken place, surely they would have taken place with the CDF and he is as mystified by this as I am.

“I note that apparently there was no attempt made to contact him and certainly there was no attempt made to raise with my office this issue of 3500 soldiers being unilaterally sent to Iraq.”

Mr Abbott said that claims his chief of staff Peta Credlin had chaired meetings of the budget razor gang were “totally false’’ but he agreed that he sometimes asked for contributions from staffers in the meeting.

Asked if Ms Credlin has told journalists that US President Barack Obama was the “lamest of lame duck Presidents’’ he replied that he wasn’t going to get into a running commentary over such claims,

“What I want to say is that I stand by my team,’’ Mr Abbott said.

Earlier, one of his most loyal lieutenants, Finance Minister Minister Mathias Cormann went on the attack claiming the allegations were a “fabrication.”

Speaking on Sky News, Senator Cormann denied that the Prime Minister sought advice on sending troops to help halt the surge of IS in northern Iraq.

“That story is wrong. The Prime Minister never sought such advice and may I say that my advice is the journalist who wrote that story never put that proposition to the Prime Minister’s office,’’ he said.

The story by John Lyons today in @australian is just complete and utter rubbish. Factually wrong. Same as Garnaut in @smh yesterday. — Joe Hockey (@JoeHockey) February 20, 2015

“The question that was put to the Prime Minister’s Office was a much more general question about whether the government would ever entertain the proposition of increasing our efforts in Iraq. Obviously, in the context of such a question you provide a very different answer.”

Treasurer Joe Hockey also went on the attack on social media. “The story by John Lyons in The Australian is just complete and utter rubbish. Factually wrong, same as (John) Garnaut in the Sydney Morning Herald yesterday.

News Corp understands the story was put to the Prime Minister’s office both verbally and in writing.

Asked if he had ever made any suggestion to put troops on the ground in Iraq, Senator Cormann repeatedly said the Prime Minister had “never sought advice”.

“The Prime Minister never sought advice as is suggested,’’ he said.

To seek formal advice on the military invasion has a particular meaning in Canberra.

The story does not state that Mr Abbott sought formal advice.

Asked if Ms Credlin had effectively chaired meetings of the ERC, Senator Cormann said she had not.

“It never happened. I am on the Expenditure Review Committee. That just never, ever happened. It is completely wrong. It is a complete fabrication.

“Obviously the Prime Minister’s chief of staff has central role in the operation of the government but as far as the operation of the expenditure review committee is concerned, the assertions made ... are wrong.

“We’ve obviously learned a few lessons. With the benefit of hindsight it is clear that last year perhaps we bit off more than we could chew. There have been adjustments to the internal processes of government.”

samantha.maiden@news.com.au