Brown and Straw branded liars over bugging of Labour whip

Gordon Brown and Jack Straw, the Justice Secretary, have been accused of lying by David Davis, the shadow Home Secretary, over assurances that ministers did not know about the bugging of a private conversation between the Labour MP Sadiq Khan and the suspected terrorist Babar Ahmad.

Mr Straw came under increasing pressure to reveal the full extent of his knowledge after officials confirm-ed that the Justice Department was alerted to the case in December – and that he, too, was aware of it.

Mr Straw's department said he regarded the claims as a smear on Mr Khan – a close personal friend of Mr Ahmad – and that he did not know the MP had in fact been bugged, possibly contravening a rule banning official eavesdropping on MPs, known as the Wilson doctrine. But Mr Davis refused to back down from his claims despite Opposition calls for an apology for the inflammatory language.

"This is a very serious issue. It is a breach of a Prime Ministerial undertaking to Parliament and makes the Prime Minister a liar, basically," he said. "It is beyond belief that the department would not flag up to a minister that the Wilson doctrine had been broken."

In a statement, Mr Straw's office said: "On 14 December, prison officials became aware of press interest in visits to HMP Woodhill by Sadiq Khan. This included the suggestion that Mr Khan's visits might have been recorded.

"No submission was received by the Ministry of Justice private office on this issue. The Justice Secretary's impression at this time was that this was an attempt at a smear story about Sadiq Khan MP and his involvement with a prisoner. He was not aware that any element of this story included a bugging allegation."

The statement added: "On Saturday 2 February, the Justice Secretary was made aware of the bugging allegation by Sadiq Khan MP and immediately announced an inquiry."

Mr Khan backed Mr Straw's account, telling friends Mr Straw did not know about the bugging until Saturday when Mr Khan was contacted by a Sunday newspaper about the allegations.

The simmering row is expected to erupt again at Prime Minister's questions today. Mr Brown will make a statement announcing that intercept evidence – obtained by telephone taps or bugging – should be admitted as evidence in court in some terrorist cases.

Mr Davis is also likely to come under pressure to retract the accusations. Last night, the Leader of the Commons, Harriet Harman, said there was no justification for calling the Prime Minister a liar. "I really do think that David Davis should apologise."

The prison intelligence officer, Mark Kearney, who claims he was told to eavesdrop on Mr Khan's conversations, added to the furore yesterday. The former Thames Valley detective sergeant said he challenged the propriety of recording the MP but was ordered to carry it out. "I did record the visit but never thought it justified in these circumstances," he said. Mr Kearney has retired on a full pension and he is fighting misconduct charges against him for allegedly leaking stories to the press, a charge he denies. He said he was not responsible for the leak about the bugging of Mr Khan, saying it had put his life at risk.

Mr Kearney's admission that Mr Khan, a former civil rights lawyer, was targeted for bugging sparked fury among Labour MPs. One said: "The police obviously targeted Sadiq because he was chairman of Liberty.

"It's as bad as the South African secret service."

Mr Straw announced on Monday that an inquiry will be carried out by a former judge, Sir Christopher Rose. But Labour MPs want it to be widened to uncover why the police appear to have focused on Mr Khan.