The government is spending $6 million on upgrades to the Marrickville Golf Club in Anthony Albanese's Sydney-based electorate of Grayndler.
It is being done through a $560 million major and local community infrastructure program, used to fund dozens of minor election promises across the country.
In September, Mr Albanese told ABC the grant was partly for fixing a sewerage run-off problem, despite there being no evidence of that from club officials.
But sewerage upgrades were never part of the agreement and had not been completed, Finance Department officials confirmed during a late-night Senate estimates sitting on Monday.
The 84-year-old club did have sewerage issues, as it was not connected to the public sewer system, and a $270,000 grant was awarded by the NSW government last September to fix it.
"I was not correct," Mr Albanese told parliament during repeated questioning on Tuesday.
"The state government have moved in and is funding the project," he said.
Before his admission, Nationals Senator Bridget McKenzie said the prime minister had misled the parliament and needed to correct the record.
It came after Infrastructure Department assistant secretary Jacinta McDonald said during an inquiry earlier in October that the grant was largely for clubhouse upgrades, including stormwater harvesting and storage tanks.
Opposition frontbencher Dan Tehan tried to suspend parliament from its usual timetable on Tuesday morning to force Mr Albanese to apologise.
"This is an opportunity for the prime minister to clear the air," he said.
The motion failed because the government has the numbers in the House of Representatives to stop it happening.
The prime minister was again asked for clarity in Question Time.
The first time, he said the NSW government "stepped in" and committed its funding after a Commonwealth election promise had already been made, before later conceding he had been incorrect in what he told ABC last month.
"It was an election commitment ... that was made," he told parliament.
The relevant local council was continuing to firm up plans for extensive changes to the club, he said.
The coalition had tried to force Mr Albanese to apologise several times previously, taking up parliamentary time to do so.
Mr Albanese was also criticised over the matter by now-wounded independent MP Helen Haines before her alleged attack.
The prime minister did not respond directly to Dr Haines' concerns, instead producing documentation of grants she had requested for her electorate.
An inquiry into the federal grants administration is ongoing and expected to report later in 2026.
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