LIBERAL MPs have used taxpayer funds to pay a company linked to the Liberal Party for voter information, a senior government figure has confirmed in an awkward live interview.

Senator Arthur Sinodinos said Liberal MPs pay the company Parakeelia Pty Ltd about $2500 a year to use so-called “feedback software”. The company is also one of the Liberal Party’s largest donors, according to Fairfax.

Liberal Party federal director Tony Nutt is believed to be a director of Parakeelia, as is party president Richard Alston.

In the uncomfortably awkward Sky News exchange, Mr Sinodinos said MPs can either pay the money from their own pocket or via their taxpayer-funded “electoral allowance”.

He admitted government MPs used the company, but was unsure if taxpayers’ money was involved.

“I don’t know if it is taxpayer money, but ... err ... money is provided to them ... yes,” he said

As host David Speers probed on, Mr Sinodinos appeared increasingly uncomfortable.

Asked whether he had used his taxpayer-funded allowance to pay the company Mr Sinodinos began a stumbling explanation of how these things could be funded.

Mr Speers cut the explanation short, saying “I am asking about taxpayer-funded office allowance that members of parliament get,” he said.

Mr Sinodinos replied: “Yeah, yeah, I understand what you’re talking about ... you could do it either way,” he said, before an exasperated Speers cut in again.

“I am asking what you have done. Did you use your taxpayer-funded allowance?” he asked.

Mr Sinodinos replied: “Well I’d have to check, but I think I would have, yes”.

Mr Speers’ one word follow-up question: “why?” had to be repeated after Mr Sinodinos said “beg your pardon?’ after a lengthy pause between studios.

He then said the information was “to provide information which we gather on electors and the like”.

“We use it to try and do our electorate business,” he said.

Asked whether paying the company was a legitimate use of taxpayer funds, Mr Sinodinos said “I believe it is, yes.”

“Both sides of politics, as I understand it, have companies which run data registers and the like,” he said.

“That would be used to provide information which we gather on electors and the like, and we use it to try and do our electorate business.”

“I am not quite sure what you are getting at,” he said.

Foreign Minister Julie Bishop defended the practice on ABC Radio.

“All parliamentarians receive a sum of money to pay for office expenses, including a small amount, I think it's a modest amount for software costs,” she said.

“The Liberal Party, like the Labor Party, has a provider for these software services that operates with normal business costs.

“I am informed that the payments we make to the service provider don’t make a profit so they’re not donations and that the operations of this service provider are entirely legitimate.”