Prime Minister Tony Abbott has defended Defence Minister David Johnston, saying he engaged in a “slip of the tongue” when he told the Senate he wouldn’t trust SA shipbuilder ASC “to build a canoe”.

“(Johnston) said something in the Senate which he shouldn’t have said, which he didn’t mean, which he’s withdrawn and which he’s apologised for,” Abbott said.

“He does not deserve to be undermined by members opposite for a slip of the tongue in the Senate yesterday.”

Johnston made the claim in question time yesterday, voicing frustration about the ASC being $350 million over budget to build three air warfare destroyers for the navy. He said the blow out could rise to $600 million.

“You wonder why I’m worried about ASC and what they’re delivering to the Australian taxpayer? You wonder why I wouldn’t trust them to build a canoe,” he told the Senate.

Abbott’s intervention follows a furious rebuke of the Defence Minister’s comments from South Australia Liberal Opposition Leader Steven Marshall this morning.

Marshall told journalists Johnston’s position was “untenable” unless he could rebuild his relationship with SA’s defence industries.

The comments caused fury in SA Liberal ranks, with a crucial by-election in the seat of Fisher coming up on 6 December.

The State Liberals have been hoping the final week and a half of the campaign will focus on the cost of living; Johnston’s comments threaten to derail that strategy.

Today, Johnston told ABC 891 that the canoe comments were a “rhetorical flourish”, later returning to the Senate to say he regretted causing offence.

Marshall launched his strongest ever attack on a federal colleague, saying Johnston’s claims were a “massive slap” in the face to the workers of ASC.

“They were disgraceful comments about the hard-working people at the ASC and he needs to do something immediately to rebuild the confidence of those people in the defence sector here in South Australia,” Marshall told journalists.

“And if he can’t, his position is untenable.”

Marshall said he would be talking to Abbott today about the comments.

“The comments made in the parliament yesterday by the minister were nothing short of deplorable. We completely reject the comments that were made.”

The exchange between the two is in stark contrast to May 2013, when Marshall praised Johnston for his pre-election commitment to build 12 new submarines in Adelaide.

That commitment has evaporated, with Johnston now saying the submarine decision will be based on what’s best for Australia.

Today, he claimed his “canoe” comments would have been more appropriately directed at the Labor Party.

“It was not an attack on the workers – let’s get that straight,” he told ABC 891’s breakfast program.

“What I should have said was the Labor Party could not be trusted to build a canoe because it was their responsibility.

“I was talking about the ASC but the responsibility for the ASC lies with Government and the previous Government completely misled the public. What I inherited as a customer, in terms of a program, is extremely frustrating.”

Johnston said he was happy to apologise to Stephen Marshall if he was offended by the statement.

“It was rhetorical flourish. It was about the way the management has simply gone ahead and not worked with Government and indeed the previous Government has misled us all in a very frustrating and I think quite concerning way that if people knew the facts, they would be very, very concerned that they’ve put at jeopardy this whole future frigate program in Adelaide.”

He quashed suggestions that South Australia was being ousted from industry development and said the Government intended to invest more than $4 billion in Adelaide, including a further eight air warfare destroyers being built here.

He said he was working to fix the industry and Adelaide would be critical to future defence spending through projects with the ASC, the Defence Science and Technology Organisation at Edinburgh and the Woomera rocket range.

Later, he was asked to respond to Marshall’s comments.

Johnston said he admired Marshall, considered him a friend and accepted his criticism.

“Steven Marshall is a very fine man and should be the premier of South Australia,” he said.

Leader of the House and South Australian minister Chris Pyne said the Government didn’t share the view Johnston expressed in Parliament in “the heat of debate”.

He said he had complete confidence in the ASC’s capabilities.

He wouldn’t be drawn on whether Johnston should retain his portfolio as Defence Minister and said it was for the Prime Minister to decide.

“He’s a very competent minister; he’s a very important member of the Coalition team and I’m working with him, as I am with the Prime Minister, to ensure that the Osborne workers keep their jobs and in fact we add to the workforce at Osborne,” Pyne told ABC radio.

Marshall was less enthusiastic about the minister, saying Johnston would receive a hostile reception when he next visited the ASC at Osborne.

“There have been problems down at the ASC, granted. But they are not the problems of the workforce. They’ve done a great job under new management to turn around their performance.”

– with AAP and Candice Keller