UPDATE 3.05pm: ANDREW Wilkie has scrapped his agreement with Julia Gillard to back the Government after she walked away from a signed agreement on poker reform.

His announcement this afternoon comes afterthe Gillard Government earlier said it would trial pre-commitment amounts on pokie machines from next year and backed away from its gambling legislation deal with Mr Wilkie.

The Government will not fall as a result of his decision because the Prime Minister secured a two-vote buffer in the hung Parliament when Liberal Peter Slipper defected late last year to claim the job as Speaker.

Despite a compromise deal on the table from the Prime Minister, government sources earlier indicated they  expected Mr Wilkie to scrap his deal to back the Government on budget Bills and no confidence motions which could trigger an election.

The Tasmanian independent, who helped Labor form government in 2010 after extracting a deal to deliver on poker reform laws by May 2012, had told the Prime Minister he expected to scrap his agreement.