Sir Christopher Kelly, who chairs the UK Committee on Standards in Public Life, was in Edinburgh to take evidence as part of the committee's inquiry into party political finance.
The inquiry was prompted by concern about the "big donor culture" in party funding and is looking at limits on donations and expenditure. State funding is one of the issues on which it is seeking views.
Sir Christopher said the committee was a long way from any conclusions.
He said: "I'm well aware that to make a recommendation on state funding at this time would be a very unpopular thing to do. That doesn't mean we won't do it if that's what we think is right."
SNP chief executive Peter Murrell said state funding was out of the question. "The public would not wear it," he added.
Scottish Tory business manager David McLetchie said all the Scottish parties faced "enormous financial strain" because they had to fight so many elections, but he said his party was firmly opposed to state funding.