Independent MP Andrew Wilkie's decision to withdraw support for the Government puts Labor back to a one-seat majority but is unlikely to lead to an early election.

Mr Wilkie says he had no choice but to walk away from the Government after Prime Minister Julia Gillard announced a watered down version of their post-election agreement to overhaul poker machine laws.

The Commonwealth's new plan involves a two-year trial of the technology in the ACT, and if it curbs problem gambling, a national roll-out in 2016.

Mr Wilkie says he is now "more independent than ever".

"It had a two seat margin, it now has a one seat margin. Before, it could count on me for supply and confidence, now it cannot count on me," Mr Wilkie said earlier today.

But even though he has withdrawn his support for Labor, he says he will not back any motions of no-confidence against the Government unless there is serious misconduct.

The ABC's Latika Bourke says the Government's decision to break the reform deal will have mixed results for Ms Gillard.

Ms Gillard has defended the move, arguing Mr Wilkie's plan for gambling reform would not have passed Parliament.

"That means you don't necessarily get everything that you would've envisaged at the start," she said.

"To secure reform, we need to take a different approach."

Independent MP Tony Windsor agrees the deal did not have the numbers in Parliament - something he says reflects the reality of a minority government.

"The Government doesn't have a majority to carry out its agenda. It has to rely on the support of others," he said.

New pokies plan Original deadline abandoned.

Original deadline abandoned. Pre-commitment built-in to new machines from 2013.

Pre-commitment built-in to new machines from 2013. 12-month trial of mandatory pre-commitment in 2013.

12-month trial of mandatory pre-commitment in 2013. Trial to end early 2014 and be reviewed.

Trial to end early 2014 and be reviewed. Poker machines to display electronic warnings.

Poker machines to display electronic warnings. $250 limit on ATM withdrawls.

"And my reading of the tea leaves is on this particular issue, the mandatory pre-commitment issue, it wouldn't have had the numbers in the Parliament."

But Mr Wilkie disputes that his original deal did not have enough support.

And while he says the new plan for poker machine reform is a "long way short", he still plans to vote for the Government's package.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 1 minute 34 seconds 1 m 34 s Wilkie speaks about the broken deal

Reformed pokies addict Julia Karpathakis, who runs Pokies Anonymous, says Mr Wilkie's reforms could have saved her a lot of pain.

"I remember always going in with the intention of only spending $20 so that's all I would have been used to," she said.

"I wouldn't have then thought, 'Oh another $20 or another $20' so my mindset would have been, 'Okay, it's $20'. I would have spent that $20 and left."

Opposition Leader Tony Abbott called the revised pokies plan "confirmation that this Prime Minister just can't ever be trusted".

Independent Senator Nick Xenophon says the Prime Minister's move is a gross breach of trust.

"Julia Gillard has bought herself a bit of time with her backbench who were incredibly nervous, but the fact is the damage to the Government's credibility will be enormous," he said.

But Senator Xenophon says the Coalition does not have any credibility either.

"Tony Abbott doesn't deserve to make any political capital out of this because his position has been both shameful and shameless," he said.

Clubs Australia has welcomed the Government's announcement, but has concerns about aspects of the policy.

Ms Gillard and Community Services Minister Jenny Macklin announced on Saturday that they were abandoning the timeline set by Mr Wilkie and would instead start a trial of mandatory poker machine technology next year.

The Government will introduce legislation to require the mandatory pre-commitment technology be installed on every new poker machine manufactured from the start of 2013, with a trial taking place in the ACT.

Ms Gillard says the technology will be in place by the end of 2016 should evidence support a national adoption of mandatory pre-commitment.

The deal struck with Mr Wilkie involved legislating reforms by May 8 that require pre-commitment, with a roll-out of the technology by 2014.