Cabinet Secretary Sir Jeremy Heywood told Labour he does "not see what purpose would be served" by an inquiry into claims that Tory adviser Lynton Crosby lobbied David Cameron over tobacco packaging.
In a letter to Labour leader Ed Miliband, who has demanded an inquiry, Sir Jeremy said:
Mr Crosby is not employed by the Government. He is contracted by the Conservative Party.
He has not been granted permission to have access to Government papers or attend Government meetings. Nor does he advise or lobby on Government business, such as the regulation of cigarette packaging or fracking.
His role, as I understand it, is to advise the Conservative Party and any meetings he may have had with the Prime Minister are on this basis, which is not in itself a conflict with the ministerial code.
More top news
The talks descended into crisis on Friday when Canada's trade minister Chrystia Freeland walked out of meetings.
Police in New York are still investigating what the substance is and whether it could be harmful.
The Sherlock actor made the comment while he received an award for his humanitarian work.