The move follows the disclosure that Alan Meale, a former parliamentary private secretary and now a minister, had lobbied to obtain planning permission for a pounds 14m sports complex on green-belt land.
Mr Meale wrote to senior civil servants and the planning minister in the environment ministry backing the proposed new stadium for Barnet Football Club in north London. The club is owned by Tony Kleanthous, a businessman.
Last night the Department of the Environment, Transport and the Regions (DETR) said in a statement personally cleared by Mr Prescott, that although nothing "improper" was done on this occasion, PPSs would be subject in future to the same rules as ministers "for the avoidance of doubt".
Michael Ancram, the Conservative Party chairman, accused Mr Meale, the MP for Mansfield, of "unacceptable cronyism" and demanded Mr Meale resign unless he could give an "immediate, full and credible" explanation.
Paul Tyler, the Liberal Democrat chief whip, declared he intended to refer the case to the Parliamentary Commissioner for Standards, Sir Gordon Downey. He added: "I find it incomprehensible that John Prescott decided he could promote this particular PPS when he obviously knew that there was a lot of correspondence going on between Mr Meale and one of his junior ministers that at the very least would seem to be inappropriate if not downright stupid."
Mr Meale, a former treasurer of the all-party Commons football group, stated last night that his long-standing involvement with the Barnet application began before the general election and before he became a PPS. It had originally been raised with him by a constituent, the chairman of Mansfield Town Football Club. He stopped making representations to the planning inspector and DETR after becoming a minister in July.
Mr Meale's letters had been to senior civil servants, and Richard Caborn, the planning minister. Andrew Dismore, the Labour MP whose constituency covers the proposed site at Copthall, Mill Hill, in the borough of Barnet, said he was "very concerned" about the intervention.
Millionaire hits back, page 4