Scott Morrison has executed a stunning backflip to support a national anti-corruption commission to avoid a humiliating defeat on the floor of Parliament.

In the biggest backdown since the Turnbull government agreed to support a royal commission into the banks, Monday’s move followed threats by Coalition MP Llew O’Brien to cross the floor and vote with Labor to legislate the reform.

Just after midday, Labor leader Bill Shorten announced the policy reversal to a near-empty chamber on the government benches, accusing the Prime Minister of being dragged “fingernails on the concrete” to the decision.

Mr Shorten said the commission should have the “powers of the royal commission”, including to compel witnesses and seize documents.

“I welcome today the Liberal and National government reversing their previous opposition to a national anti-corruption commission,” he said.

“Now, of course, Australians do have the right to ask how sincerely and strongly the Prime Minister believes in the national integrity commission or if he’s just protecting his job?

“It should not have taken the fear of losing a vote on the floor of the Parliament to be dragged, fingernails on the concrete, into the chamber to endorse … a national integrity commission.”

The Liberals agreed to support a motion from the Senate in support of a commission but indicated they did not support the model proposed by the cross bench.

Earlier, The New Daily revealed Mr Morrison faced a rebellion on the floor of Parliament with Mr O’Brien threatening to cross the floor and vote with Labor to legislate an anti-corruption watchdog.

“I think it’s a bit of a no-brainer at the federal level,” Mr O’Brien said.

“Much of the public have lost trust in the political system and politicians and this is certainly a step in the right direction of rebuilding that trust.

“All I will say is this is a matter I have given much consideration to and, as it stands, I am not ruling out supporting an appropriate bill.”

Llew O’Brien threatened to cross the floor and vote in favour of an anti-corruption commission. Photo: AAP

Attorney-General Christian Porter later made it clear the government was happy to support an integrity commission but it would not accept the independent MPs’ preferred model.

Mr Porter indicated that he believed the ABC’s national political editor, Andrew Probyn, could be found guilty of corruption under the poorly drafted laws. In May, Probyn was accused of a lack of balance in a report on Tony Abbott, in which he described the former prime minister as the “most destructive politician in a generation”.

Mr Porter’s remarks sparked laughter, but he went on to warn MPs to be careful about what they voted for.

“This is an area for the most sober and cautious deliberation,” he said.

Independent Cathy McGowan – a key instigator of the cross bench move for a federal anti-corruption commission – said she hoped from the “bottom of my heart” that the government would support her bill.

“Most of your backbench seems to be in favour of it,” she said.

Greens MP Adam Bandt welcomed the new reality of a minority government where the cross bench could “put things on the agenda that the Australian people wants” – even if the government did not agree.

“This is how we got the royal commission into the banks established,” he said.

Independent MP Bob Katter is yet to declare his hand, having indicated the model would be crucial to his decision.

“I find it very difficult, because I can see the need for it. But, on the other hand, I see the great dangers which exist,” he told Parliament.

Deputy Labor leader Tanya Plibersek said she welcomed the NSW anti-corruption commission’s role in sending former ALP figure Eddie Obeid to jail because it was like “cutting out a cancer” from the Labor Party.