The Prime Minister said ''no one's angrier than me'' over the ''grave error of judgment'' that led to a medal ceremony for emergency services heroes being besieged by a mob on Australia Day.

She confirmed that her media adviser, Tony Hodges, had asked an intermediary - Unions ACT secretary Kim Sattler - to send indigenous people to The Lobby restaurant to respond to Mr Abbott's remark.

But she insisted that Mr Hodges acted alone and without clearance from his superiors, and had never suggested that Mr Abbott wanted the tent embassy torn down.

The Coalition yesterday demanded a federal police investigation into the ''grubby business'', with Mr Abbott saying the ensuing protest was a ''serious security breach'', and accusing the government of trying to trigger ''something potentially dire'' for political advantage.

Ms Gillard said it was ''deeply offensive'' for the opposition to suggest she wanted to see disruption to an awards ceremony that she had initiated.

''No one's angrier than me about what happened on Australia Day,'' she said. ''The people who initiated those violent acts, the people who were involved in those violent acts, are responsible for the violence that was there.

''Their conduct has made me very angry, it's understandably made people around the nation very angry indeed.''

The Australian Federal Police said it had no referral for an investigation.

The manager of opposition business, Christopher Pyne, demanded the Prime Minister ask the police to investigate, saying the opposition would consider a formal referral if she did not.

Ms Gillard said Mr Hodge was a ''hardworking'' and ''decent'' person who had paid a high price for his mistake.

Before being named as the go-between by the Prime Minister and several Aboriginal tent embassy activists, Ms Sattler yesterday denied speaking to Mr Hodges either in person or by phone, insisting she learnt of Mr Abbott's presence next door from others in the crowd at the tent embassy. ''I heard it from people on the ground, I did not talk to Tony Hodges,'' she told The Sunday Canberra Times.

On Thursday, Ms Sattler posted pictures of the protest at The Lobby on her Facebook page and wrote: ''Tony Abbott just announced the Tent Embassy should be closed down and a huge crowd from the Embassy went to greet him and he had to be rushed away with a police escort!''

But Michael Anderson, one of the four founders of the embassy, said Ms Sattler came up to him before the protest and said the Prime Minister's office wanted to talk to him.

Central Australian Aboriginal activist Barbara Shaw said Ms Sattler then told her about the Abbott comments and suggested she might want to tell the crowd, which Ms Shaw did.

Mr Anderson said the decision to tip off the crowd, given the heady emotions on the day, was a set-up. ''Someone set us up,'' he said. ''They set the Prime Minister up. They set Abbott up.''

Mr Abbott has since made it clear he does not believe the embassy should be torn down.

The adviser and the leak

■Media adviser Tony Hodges is at The Lobby restaurant on Australia Day before the PM's arrival for an awards ceremony.

■Hodges is told by journalists about comments Abbott had made suggesting people should ''move on'' from the Aboriginal tent embassy.

■Hodges decides there should be a response and contacts the office of ACT Indigenous Affairs Minister Chris Bourke, who is not available, and is referred to Unions ACT secretary Kim Sattler. He speaks to her by phone.

■Gillard says Hodges ''accurately conveyed to her [Sattler] the statement made by Mr Abbott. At no point did Mr Hodges say to Miss Sattler that Mr Abbott had suggested the tent embassy to be torn down. He suggested it might be appropriate for a couple of indigenous people to be present at the Lobby to respond to Mr Abbott's comments.''

■Hodges tells the PM's senior press secretary, Sean Kelly, and communications director John McTernan - after the event.

■On Friday, Gillard is briefed by senior staff.

■Gillard meets with Hodges and accepts his resignation.

With Julieanne Strachan