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ePolitix.com reports on Wednesday's questions to Cabinet Office ministers.
Shadow Cabinet Office minister Francis Maude said the Financial Services Authority should have warned charities about the risk posed by Icelandic banks at the beginning of last year.
During Duchy of Lancaster questions, Maude said the failure to do so has accentuated the financial woes of charities during the current economic downturn.
"Sorry still seems to be the hardest word," he added.
Maude also called for action to be taken against charities that channel funds to terrorist organisations.
Cabinet office minister Kevin Brennan said links between charities and terror groups were "unacceptable, but rare".
He said that the Charity Commission took any allegations seriously.
Brennan argued that it was important to maintain investment in the third sector at a time of recession.
The chancellor of the Duchy of Lancaster, Liam Bryne, said that the government would not "cut its way out of recession" and said it was committed to increasing investment in public services.
"We do not believe that unemployment is a price worth paying," he added.
He said he was determined that there would be "specific targeted and focused help" for charities that are facing the double pressure of declining incomes and increased demand for services.
Bryne said he wanted to strengthen the role of charities involved in delivering public services, such as Futurebuilders.
Brennan added that the modernisation fund would pump much needed money into the charity and voluntary sector.
"Measures coming into force today enable charities to cut up to £5m of red tape," he added.
Adrian Bailey (Lab, West Bromwich West) said that there was potential for those leaving jobs due to the recession to contribute to the sector.
Brennan agreed, and said that the recession action plan would free up £10m to provide volunteering opportunities for people made redundant.
Nick Hurd, shadow charities minister, said that churches and sports clubs were facing the added financial pressure of rising water bills.
"The government must avoid making this even harder," he said.
Sharon Hodgson (Lab, Gateshead East and Washington West) argued that public sector investment should encourage more creative and green industry in order for the UK to "fight its way out of recession".
She cited Smith Electric Vehicles as a good example of this industry.
Bryne said that presence of the electric vehicle industry in his constituency ensured he was "passionately committed" to that cause.
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