Labor and the Greens will attempt to prevent the Morrison government from underwriting new coal-fired power as the energy policy battle moves into its next phase.

Labor on Tuesday resolved to support a Greens bill stopping the commonwealth from providing financial assistance to coal-fired power plants, and there is an effort to secure the requisite parliamentary numbers for an upset as the Morrison government moves ahead with its controversial energy package. Negotiations are under way with crossbenchers in both chambers.

The government secured a rubber stamp from the Coalition party room on Tuesday for policy measures aimed to reduce power prices, including a contentious divestiture power, but Guardian Australia revealed on Monday night ministers had to rework the original proposal substantially to head off a backbench revolt.

Frantic work by senior ministers over the past couple of weeks did not prevent a significant debate about the package in the Coalition party room meeting on Tuesday. Nine MPs expressed in-principle objections to the so-called “big stick” divestiture powers, including the former deputy Liberal leader Julie Bishop and the Senate president, Scott Ryan.

Nine MPs, including the former National party leader Barnaby Joyce and several other Nationals, spoke in favour of the package.

Coalition MPs ticked off the package despite the objections and despite not having sighted the reworked legislation, which is expected to be introduced to the House on either Wednesday or Thursday, and will need the support of two crossbenchers to pass, because Labor is opposed.

It is not yet clear whether the government will seek to bring on the chamber debate this week – the final sitting week of the year. The former Liberal MP Julia Banks has already expressed strong reservations about the package, telling Guardian Australia on Monday night that divestiture powers were “totally counter to liberal values of free enterprise and small government”.

With serious concerns being expressed by MPs, business groups and legal experts, the government redrafted its initial proposal on divestiture to remove a government minister as the primary decision-maker, instead handing that power to the courts. The government package will also sunset in 2025.

Business groups are relieved the government is listening, but are not mollified. The chief executive of the Business Council of Australia, Jennifer Westacott, said it was clear the government had listened to the criticism, but she said “further work needs to be done”.

Westacott said the proposed laws “represent an unprecedented shift in Australian law, and remain open to a misuse of power” and the government had not yet explained the rationale for the measures.

The Australian Energy Council, which represents major power companies, took a similar view. The AEC’s chief executive, Sarah McNamara, welcomed the movement, but she said the sector remained “alarmed at the government’s intention to legislate an onerous and unprecedented set of market interventions which will only increase risk to investors and costs for consumers”.

The government is also attempting to select a number of new projects by the end of January bringing on new power generation, to be underwritten by taxpayers.

The energy minister, Angus Taylor, who has signalled coal will be in the mix, with a possible indemnity against the risk of a future carbon price, declined to answer questions from journalists on Tuesday about whether the government would enter binding contracts with proponents before the next election, which would be difficult to unwind if the Morrison government loses next year.

The Greens, with support from Labor, are attempting to head that sortie off at the pass with the new private members’ bill. Discussions with the crossbench are under way in both chambers – but it is unclear whether the foray will succeed.

Greens MP Adam Bandt, who could be a crucial vote for the government on the divestiture package because the party is not opposed to the idea, warned the Coalition not to “rely on support from the Greens on energy issues while … trying to sign contracts for new coal-fired power stations”.

Bandt also made it clear the government should wait until the new year to bring the divestiture on for debate. “There is such a high level of division within the government over this proposal that we could see a repeat of the split that emerged over the national energy guarantee, so if the government agrees amongst itself on a policy and actually brings the legislation on for debate next year, we’ll look at it”.

The government’s difficulties on energy policy were also compounded earlier in the day when the former prime minister Malcolm Turnbull publicly declaring his ongoing support for the national energy guarantee.

Turnbull also mocked former colleagues pushing for coal-fired power stations as being driven by “ideology and idiocy”, saying they were bereft of the facts on the cost of coal generation compared with renewables.

Turnbull’s comments emboldened Labor in question time to push Scott Morrison about his previous support for the national energy guarantee, which the opposition says it will seek to preserve with a higher emissions reduction target of 45%.