An Indigenous foundation has rejected a donation from Labor senator Sam Dastyari, in the wake of concerns about funds he accepted from China-linked interests to repay a debt.

Senator Dastyari has admitted he was wrong to let a company with links to the Chinese government pay a $1670.82 bill incurred by his office.

Under parliamentary privilege, Liberal senator Cory Bernardi has claimed the transaction has the “stench of corruption” and called for him to stand down or be sacked.

Senator Dastyari said “on reflection” he should have paid the bill himself, and he had promised to donate the money to charity.

The ABC has confirmed the Australian Literacy and Numeracy Foundation received a donation on Wednesday morning.

But a board member of the foundation, Tom Calma, confirmed the money had been returned.

He said that while the money was being questioned in Parliament the foundation “did not want to be compromised” by receiving the money.

amount has been donated to charity – as I indicated this morning. It was the appropriate thing to do. (And yes – accepted).

— Sam Dastyari (@samdastyari) August 31, 2016

Senator Dastyari’s office says the money has been donated elsewhere, but has not disclosed the recipient.

He said he was also talking to the Department of Finance about how he could personally repay the bill.

-ABC