Speaking at his constituency home in Beaconsfield, Buckinghamshire, Mr Smith responded to charges in the Guardian that he had taken between pounds 18,000 and pounds 25,000 from the Harrods owner, saying: "I have written to the Speaker about what I believe to be a contempt of Parliament and a fundamental abuse of the rights of natural justice."
He added that he now thought it would have been better if Sir Gordon Downey's report had been published in full rather than the publication of stories which were full of inaccuracies and based on "totally unacceptable" leaks.
Mr Smith received the support of his association in a confidence motion last night following the allegations. After answering a series of detailed questions to members he emerged after the two and a half meeting to say: "There was a spontaneous motion of confidence in me. I'm delighted that the members of my association are supporting me."
The constituency chairwoman, Mrs Deidre Holloway, said that the motion of confidence had been carried on a round of applause "and there was no dissent." She added: "We fully support his candidacy."
Senior members said they'd heard no new allegations from what Mr Smith had told them before his re-adoption for the seat in 1995. However one person left the meeting, asking not to be named saying: "He is dishonest. He should have resigned as an MP."
Responding to allegations that the Government knew about his receipt of cash before he became a Northern Ireland minister, Mr Smith said earlier that he had told the then Chief Whip David Waddington in February 1989 of the payments.
Pressed on whether this information was - or should have been - passed on to John Major when he became a minister, he replied: "The Prime Minister in 1989 was not John Major. I have no reason to think that he was aware of this. That is why I take strong exception to the way the Guardian has portrayed it."
The MP said he would be defending his majority of nearly 24,000 - the third safest Tory seat in the country - on both national and local issues. "I'm going to fight on," he said. The former Chief Whip, now Lord Waddington and Governor of Bermuda, issued a statement yesterday saying he had no recollection of a meeting in 1989 with Mr Smith.
Last night, Labour said it was angry that while Mr Smith might have told his association that he had received at least pounds 18,000 from Mr Fayed, his constituents had not been made aware of it and had only been told of the earlier figures of between pounds 2,000 and pounds 6,000.
The Labour candidate, Alastair Hudson, said that at a head-to-head public meeting with Mr Smith last November, the MP had been challenged on the issue but had made no attempt to update the electorate on the true figures involved.
A Tory voter who asked not to be named said she was "very disappointed" that the affair had resurfaced. But she added: "We gave him another chance last time - I suppose we'll give him another chance now."
Pensioner Ernest Leslie, a rare Labour voter, said: "It won't make much difference; the Tories will still win here. If you put a blue rosette on a donkey they'd vote for it."Reuse content