Opposition Leader Bill Shorten has backed reform of donation laws, in response to allegations of mafia links to Australian politics.

Mr Shorten told reporters in Melbourne the Liberal Party has questions to answer over Amanda Vanstone’s decision in 2005 to overturn an order to deport Frank Madafferi despite his convictions for extortion, mafia conspiracy, two stabbings and drug and gun possession in Calabria.

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A joint investigation by the ABC and Fairfax Media alleges the Madafferi family made donations to the Liberal Party before the deportation decision.

“We ask Mr Abbott and the Liberal Party to join with us to further improve confidence in our democratic system,” Mr Shorten said.

Former federal leader John Hewson has called for the law to change so that only individuals can make political donations.

The joint investigation revealed that the Madafferi family used the Millennium Forum, a NSW Liberal Party fundraising group, to make their donations.

Mr Hewson told ABC radio on Tuesday there should be a $1000 cap on donations from individuals, with immediate, continuous disclosure.

The Australian Greens have also seized on the revelations to renew calls for an overhaul of the donations system.

Senator Lee Rhiannon said the major party leaders shouldn’t expect the scandal to just blow over and had to act quickly to tighten rules.

Continued failure to act just added to already deep public cynicism about the motivations behind giving and receiving large political donations, she said in a statement.

-with AAP