Labor leader Bill Shorten says he has lost faith in Sam Dastyari and describes the senator as exhibiting very poor judgement and having deeply frustrated his ALP colleagues.

Key points: Tape emerged yesterday showing Senator Dastyari publicly defended China's South China Sea policy, defying ALP policy

Tape emerged yesterday showing Senator Dastyari publicly defended China's South China Sea policy, defying ALP policy Mr Shorten called Senator Dastyari last night, told him he was dumped from junior role in Senate

Mr Shorten called Senator Dastyari last night, told him he was dumped from junior role in Senate Senator Dastyari accused of bringing "crocodile tears" to Senate after emotional mention of impact on his young family

Mr Shorten has dumped Senator Dastyari from his position as assistant Senate whip as well as his role as a Senate committee chair because of new information about his relationship with a Chinese businessman.

It is the second time he has sacked the senator over his links to Chinese donors.

The most recent problem came when a previously unheard recording emerged of him speaking about the South China Sea in a way that contradicted official ALP policy.

The recording shows Senator Dastyari's remarks to Chinese media were stronger than he previously had portrayed them.

He said he was shocked when he heard the tape and it "did not match [his] recollection of events".

Mr Shorten made it clear Senator Dastyari's prospects of returning to more senior jobs were poor.

"At the moment I don't trust his judgement again," Mr Shorten said.

"I have lost faith in him and I do think his judgement was erroneous and he did make a significant mistake of judgement and that is why I have sacked him again.

"But I do not believe he has broken a law and I do not believe he is a national security risk."

Bill Shorten is not telling Sam Dastyari to quit as a senator. ( AAP: Dan Himbrechts )

The Labor leader said Senator Dastyari had "a long long journey to rebuild trust".

"He has got a long way to go, a very long way to go full stop," Mr Shorten said.

"I am deeply disappointed with him.

"He will know that his colleagues are deeply, deeply frustrated with his very poor judgement."

The Government is demanding Senator Dastyari quit Parliament.

"Sam Dastyari should get out of the Senate, full stop. That's his duty," Prime Minister Malcolm Turnbull said this morning.

Senator Dastyari is resisting those demands but has accepted the new information about his actions has cost him two roles.

"I find the inferences that I am anything but a patriotic Australian deeply hurtful, nonetheless I am not without fault," he said in a statement to the Senate this morning.

He conceded that his comments about the South China Sea last year were in breach of Labor party policy.

"I have never denied this," he said.

That cost him his position on Labor's frontbench last year, which he said was a "high but appropriate" price.

He has come under renewed pressure because the recording of those remarks has emerged and conflicts with the way he has described what happened.

Sorry, this video has expired Dastyari: It was a significant mistake

Dastyari accused of bringing 'crocodile tears' to chamber

Senator Dastyari said the tape shocked him "as it did not match my recollection of events".

"I take responsibility for the subsequent mischaracterisation. When a public official makes a statement that contradicts events there are consequences," he said.

"For me the consequence is being called last night by Bill Shorten and being asked to resign from my position in the Labor Senate organisational leadership."

Senator Dastyari became emotional while asking his colleagues to consider the impact the saga had on his young family, but LNP senator Ian Macdonald characterised this as a "coward's response".

"With the indulgence of the Senate, I want to acknowledge my amazing wife and two daughters who keep having to put up with the heightened spotlight," Senator Dastyari said.

"Hannah is now six and has to answer questions in the playground. That breaks the heart of any father."

Senator Macdonald responded: "Everybody knows that Senator Dastyari puts on social media videos with him and his children talking about political matters like banking royal commissions.