Gordon Brown has said he is looking into "every possible avenue" legally to reduce former RBS chief Sir Fred Goodwin's £16m pension deal.
He said lawyers were looking at details of the deal but did not repeat Harriet Harman's suggestion a new law could be passed to stop Sir Fred getting it.
Ms Harman, Labour's deputy leader, has said ministers will "step in" and Sir Fred "should not count on" his package.
But the Liberal Democrats said a law to deal with one person was "potty".
In an interview with TalkSport radio on Monday, the prime minister said he was looking at the "very strange" decision by the Royal Bank of Scotland to agree such a large pay-off - ahead of announcing a record £24bn loss.
He added: "Of course if it came to a court of law, we would be legally bound by the contracts that have been entered into.
"But I think there are aspects of the contracts that are discretionary and that is what our lawyers are looking at in much detail at the moment."
But BBC political correspondent Carole Walker said new doubts had been raised about whether any part of the pension package was discretionary - which would make it very difficult to reclaim through the courts.
Harriet Harman says Sir Fred will not get his pension pay-off
The prime minister's official spokesman said "all legal avenues" were being explored, including "whether the RBS board took the decision in full knowledge of all the facts" but added that the government would be "bound by the rule of law".
When Sir Fred, 50, agreed to take early retirement as RBS chief executive in October his pension fund doubled to £16m.
At the time the government was preparing to pump £20bn into the crippled bank and wanted to get new management in place.
The prime minister has said he only discovered recently that the pension package was in fact "discretionary" and could have been blocked.
But Sir Fred has refused to voluntarily give up some of the money, arguing the package was approved by Treasury minister Lord Myners.
'No rewards for failure'
However, during a House of Lords debate Lord Myners said he did not "endorse" Sir Fred's pension deal.
He told peers that, when he met senior RBS executives on 11 October last year, he had "used a standard script".
Lord Myners added that he had told them that the government "would expect there to be no rewards for failure" and expect banks to "minimise the cost of any severance that would arise".
He said he had been told Sir Fred's pension would be "a large sum" that reflected "30 years of service" and added: "I believe I was only advised of the sum of the pension a few days later."
I really don't know whether she's thought this thing through at all
Ed Balls, the schools secretary, told BBC Radio 5 Live it was "not true" that Lord Myners had endorsed the deal and said Lord Myners was focussed at the time on making sure RBS "didn't go into complete freefall".
On Sunday Ms Harman told the BBC Sir Fred "should not count" on being £693,000 a year better off "because it is not going to happen".
She said: "The prime minister has said that it is not acceptable and therefore it will not be accepted."
"And it might be enforceable in a court of law, this contract, but it is not enforceable in the court of public opinion and that is where the government steps in."
Asked whether she was saying legislative action would have to be taken, she said she did not want to "jump the gun" as Sir Fred had been asked to "forego it" and the contract was being "crawled over" by the lawyers to see if it was enforceable.
For the Conservatives shadow chancellor George Osborne has criticised the government's response as "synthetic" because "they knew all along" about the deal.
Vince Cable, the Lib Dem Treasury spokesman, who told the BBC it was "absolutely potty" to suggest bringing in a new law for one person and applying it retrospectively.
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