TORONTO - Finance Minister Jim Flaherty has conceded that the economic projections in last month's controversial update were overly rosy in light of deteriorating conditions, Liberal MPs say.

Finance critics John McCallum and Scott Brison emerged from a one-hour consultation with the finance minister Monday in Toronto saying they were promised a more "realistic" picture before Christmas.

"He certainly admitted that the economic situation has deteriorated since receiving the forecasts (for the Nov. 27 fiscal and economic statement). He does agree that the forecasts were too rosy," McCallum said in a cellphone interview.

Flaherty invited the opposition finance critics to discuss the upcoming Jan. 27 budget in an effort to avoid a second showdown over the government's handing of the economy. He is expected to confer with the NDP's Thomas Mulcair later this week.

Prime Minister Stephen Harper escaped a vote of non-confidence on Dec. 8 that would have ousted his minority government, by persuading the Governor General to suspend Parliament until Jan. 26, with a budget to come the following day.

Although Harper jettisoned some provocative measures in the November update, the underlying cause of the dispute -- whether the government is doing enough to rescue the economy -- remains.

Flaherty did not speak to reporters after the meeting, but his office released a statement:

"We are in difficult times and we are going to have to continue to make some difficult choices in Canada. We must strive to meet the needs of Canadians, which is why we are listening closely to make our economy and our country stronger at a time when it is clear that the entire world economy is deteriorating."

The two senior Liberals are calling on Flaherty to table a budget with significant stimulus -- perhaps $30 billion over two years -- but said they would not name a specific figure until Flaherty clarifies the situation.

"You need to know where you are before you can figure out where you want to go," McCallum said.

Brison said Flaherty pledged to provide an updated forecast for the economy as well as a plan for selling $10 billion in government assets over five years, as demanded by the Liberals.

"We had an extremely constructive meeting and I am very hopeful Mr. Flaherty is going to provide us with realistic and reliable fiscal numbers that we can depend on," he said.

In the November update, Flaherty projected a $100-million budget surplus over each of the next two fiscal years based on the economy growing 0.3 per cent in 2009.

Although the growth estimate was based on an average of private-sector economist outlooks, many analysts said it was already out of date and the economy was likely to shrink next year, hit by the U.S. downturn and the collapse of oil and other commodity prices.

The Bank of Canada has since declared that the country is entering a recession, and Statistics Canada reported a loss of almost 71,000 jobs in November.

The weakness of the economy makes it critically important that Flaherty work with other parties to get his budget right, said Brison.

While the Liberals have cooled to their coalition with the NDP, supported by the Bloc Quebecois, that would have defeated the government, new leader Michael Ignatieff has maintained he is prepared to oust the Conservatives -- triggering a coalition government or an election -- if the budget is unacceptable.

Brison said the preferred route is for a realistic budget that tackles Canada's economic problems.

"During these extraordinarily difficult economic times Canadians clearly want to see a better level of co-operation in Parliament, and the Liberal party is open to that co-operation," he said.

In a letter to Flaherty delivered Friday, McCallum and Brison called for a two-year stimulus package with investments in infrastructure, key industries like manufacturing, forestry and autos, housing, and skills training.

Flaherty is scheduled to meet his provincial and territorial counterparts in Saskatoon on Wednesday.