The evidence to Sir Gordon Downey, the Parliamentary Commissioner for Standards, reveals that Tim Smith, the minister who resigned as soon as the affair came to light, accepted between pounds 18,000 and pounds 25,000 in cash payments from Mohamed al Fayed which he did not declare on the register of members' interests.
He was allowed to continue in office even after John Major had been told about the payments, according to the Guardian.
The Guardian was given all the evidence to the Downey inquiry because its revelations led to its establishment and has published it over five pages in today's edition.
According to the newspaper: "In September 1994, after Mr Fayed's investigations against Mr Smith and three other ministers were brought to Mr Major's attention, Sir Robin Butler, the Cabinet Secretary conducted an investigation.
Mr Smith admitted taking fees of up to pounds 25,000. Mr Major was told about this, but Mr Smith did not offer his resignation and remained in office.
This was a month before Mr Smith's eventual resignation after the allegations were made public.
The Guardian's decision to publish is set to cause a furore and will clearly anger both Sir Gordon, who has spent six months gathering evidence, and the Tories.
In an editorial, the Guardian justified its publication of the evidence, which appears to be a massive breach of privilege, by saying it believed "in elections fought in the light, not in the dark".
Last night, the Guardian's editor, Alan Rusbridger, said: "It's up to Parliament to decide whether this is a privilege. Our lawyers have advised us that there is a public interest defence open to us."
Mr Smith is standing in the election for Beaconsfield where he has a majority of nearly 24,000 but his candidacy will undoubtedly be put in doubt by these revelations.
The Guardian says that the evidence also reveals that Neil Hamilton, the MP who has repeatedly claimed he did not accept any undeclared payments, now admits that he took the "secret commissions" worth about pounds 10,000.
He also "admits not declaring them on the register [of members' interests]."
Mr Hamilton further admits claiming travel to New Orleans as a business expense, the newspaper says, when the plane tickets were given to him free by Ian Greer, the former parliamentary lobbyist at the centre of the affair.
The Guardian says that Mr Hamilton and another MP, Michael Brown, have admitted to the Downey inquiry that they lobbied ministers without declaring their financial interests in the members' register. Both men have rejected the Guardian's claims.
The cash-for-questions affair had already led to the angriest ever exchanges between the Prime Minister and Tony Blair at Question Time. The Labour leader accused the Prime Minister of leaving a stain on Parliament, drawing the retort that the Opposition were engaged in a political stunt.
Mr Major concluded the question-time exchanges by running through a breathtaking list of Labour double-standards that delighted the Conservative benches, and enraged the Opposition.
Earlier, Michael Heseltine, the Deputy Prime Minister, set the tone of the day, telling BBC radio's Today programme that Labour did not "give a toss" about the cash-for-questions issue.
In a later Sky News interview, Mr Heseltine had appeared to libel Mr Blair by saying, wrongly, that the Labour leader was under investigation by Sir Gordon Downey, the Parliamentary Commissioner for Standards.
Today's prorogation kills all further action until after the election, and Mr Blair yesterday offered Mr Major two ways of keeping the investigation alive: a postponement of prorogation; or a short Bill giving the committee power to carry on meeting.
The Prime Minister also said that it was "improbable in the extreme" that there would be enough time to complete an investigation before Parliament was finally dissolved on 8 April.Reuse content