The Federal Government is preparing to drop or radically rework one of its most contentious budget policies – the $7 GP co-payment.

With only five full sitting days left in the parliamentary year, Prime Minister Tony Abbott was keen to start 2015 on the front foot.

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Yesterday, he told Coalition MPs and senators there were one or two “barnacles” on the Government but they would be knocked off by Christmas.

One of those “barnacles” was the $7 GP co-payment, which did not have sufficient support to pass the Senate.

The Government is yet to even introduce legislation to enact the measures in the Lower House and was now unlikely to do so.

Sources had told the ABC the Coalition was “willing to go back to the drawing board”.

The Government was also expected to make further changes to its $5.5 billion paid parental leave scheme, a signature policy for Mr Abbott.

The policy would pay new mothers their full salary for six months.

Mr Abbott had already watered down the scheme, lowering the maximum possible payment from $75,000 to $50,000.

Further changes were now in the works.

Government sources denied the scheme was one of the “barnacles” mentioned, but they had foreshadowed “further refinement”.

Labor is expected to target the backdowns in Question Time today.