Labour claims New Zealand could see "US-style Government shutdowns" if ACT enters a confidence-only partnership with National and NZ First.
The election is fast approaching and recent polling suggests National would need both ACT and New Zealand First to form a Government.
The latest Newshub Reid Research Poll showed the right bloc of National-ACT would only get 60 seats - one short of the number needed to form a government. This means they would need New Zealand First who would have six seats based on the Newshub poll.
But a potential coalition is proving tricky with ACT leader David Seymour feuding with NZ First's Winston Peters.
The uncertainty has prompted warnings of a second election from National and now ACT is repeating warnings from three weeks ago about refusing to enter a coalition government if its bottom-line policies aren't met.
On Monday leader David Seymour repeated his threat that if National did not agree to ACT's top demands, the party would not form a coalition and would instead vote for every piece of legislation on a bill-by-bill basis.
"What we're going to be doing is saying, of course, if you don't want to work properly together, that's okay. You will still be Prime Minister, but we'll work more distantly, and we'll have to work through vote by vote to do it," he told Politik.
It would mean ACT would have a veto over every single Government bill.
Labour's Grant Robertson said it could result in "US-style Government shutdowns".
"The coalition of chaos' meltdown days out from the election has accelerated with David Seymour repeating his threat to destabilise a possible future Government by sitting on the cross benches and voting issue by issue," Robertson said on Monday.
"National, ACT and New Zealand First's final week meltdown is giving New Zealanders a taste of how chaotic a government they would be.
"Yesterday Chris Bishop was talking about a second election rather than working with New Zealand First, today ACT is talking again about holding a government to ransom by voting issue by issue and not offering confidence and supply."
Robertson said voting issue by issue would force Christopher Luxon and Winston Peters "to go cap in hand to David Seymour on every single vote, every single dollar of spending and there is no guarantee that could pass a budget".
"That could result in US-style Government shutdowns where nothing can happen until David Seymour gets his way.
"New Zealand has never had a government like that before. It would be incredibly chaotic, destabilising and would put New Zealand's economic recovery at risk.
"All this highlights Christopher Luxon's poor judgement and inexperience and points to the rings Seymour and Peters will run around him. It's clear that if he wins, New Zealand will lose."
Robertson said only Labour can offer a mature, experienced and stable government.
"If National, ACT and New Zealand first can't agree on anything this week, there is no way they can offer stable Government after the election. Only a party vote for Labour achieves that."
It comes as National ramps up its efforts to stop New Zealand First holding the balance of power by raising the prospect of a second election.
National's campaign chair Chris Bishop said the party is concerned the inability to strike a deal with both minor parties could force Kiwis back to the voting booth.
"We will pick up the phone if we have to and try to make it work. But there is a real possibility of the necessity of a second election and it's a growing one, unless people cast a strong vote for change," Bishop said.
Bishop urged Kiwis to vote for National so it can avoid needing to work with smaller parties.
"I'm just laying out for New Zealanders the reality of the potential post-election scenarios. There's any number of uncertain and risky scenarios and our strong message to New Zealanders is if you want a change of government, then you have to go and party vote National. That's the simplest and most sure-fire, guaranteed way to change the government," he told AM.
"The last thing this economy needs is eight weeks of coalition talks, things dragged out, people going backwards and forwards.
"What we need is a strong, decisive result on election night. A strong mandate and I believe most New Zealanders want a mandate for change. They want a change of government and my message to them and our message to them is, 'If you want change, don't overthink it and go and vote for National today'."
It's not the first time ACT has floated a confidence-only deal before. In September, Seymour said if National is not prepared to "fully share power", ACT would consider a minority-government position.
"We're prepared to do it if the alternative is taking the baubles of office and letting our voters in New Zealand down. So yep, I've done it before - I turned down being a minister to do End of Life Choice," he told RNZ.
