Works now.
I changed the RC values of my switch debouncing and changed the interrupt rutine from:
Code:
toggle led1
to
Code:
low LED1
pause 50
high led1
pause 50
Now it works providing I don't hold the switch for too long or it triggers another interrupt.

Code:
CMCON = 7                    ' PortA = digital I/O

INCLUDE "DT_INTS-14.bas"     ; Base Interrupt System
INCLUDE "ReEnterPBP.bas"     ; Include if using PBP interrupts

LED1   VAR  PORTA.1

ASM
INT_LIST  macro    ; IntSource,        Label,  Type, ResetFlag?
    INT_Handler    RBC_INT,  _ToggleLED1,   PBP,  yes
    endm
    INT_CREATE               ; Creates the interrupt processor
ENDASM

@   INT_ENABLE   RBC_INT     ; enable external (INT) interrupts

Main:
  @ sleep
GOTO Main

'---[INT - interrupt handler]---------------------------------------------------
ToggleLED1:
  low LED1
  pause 50
  high led1
  pause 50
@ INT_RETURN