Conservative Party co-chairman Baroness Warsi hit back today amid allegations that she claimed £165 a night in accommodation expenses while staying rent-free with a friend.
Lady Warsi, from Dewsbury, was speaking during a visit to Malaysia. She says she made an "appropriate financial payment" to her friend Naweed Khan who's now employed as her special adviser.
Lady Warsi today said she would co-operate with any inquiry, but declined to answer questions over whether she would resign over the row.
Speaking to ITV News during a visit to Malaysia, she said: "I take these allegations very seriously; it's why I said right at the outset that I would fully co-operate with any investigation."
– Baroness Warsi
"I believe that being a member of the House of Lords is a privilege. I take that privilege seriously. It's why I have always ensured that my conduct, including in relation to expenses and allowances, is both in accordance with the law and the spirit of the rules."
Mr Khan supported her assertion, releasing a statement saying she made a payment each time she stayed. But the property's owner, GP and former Conservative donor Wafik Moustafa, denied receiving any income from either Lady Warsi or Mr Khan.
The peer, now a Cabinet Office minister, was claiming Lords subsistence of £165.50 a night at the time in 2008 to which the allegations relate.
A Downing Street spokeswoman said David Cameron continues to have confidence in Lady Warsi and is happy for her to remain in post during any inquiry.
The spokeswoman said Lady Warsi had not offered her resignation to the Prime Minster.