Commons leader Harriet Harman denied today that ministers had been influenced by the alleged lobbying of former Cabinet ministers into making improper decisions.
In a Commons statement, Ms Harman said ministers in both the Department of Transport and Business were clear that decisions had been made "properly in the public interest".
She confirmed that the Government planned to put a register of lobbying interests on a statutory footing.
But shadow leader of the House Sir George Young warned that far from clarifying the facts, Downing Street had done precisely the opposite and criticised the Prime Minister for ruling out an inquiry.
He said the alleged lobbying of Whitehall departments by former Cabinet ministers, including Stephen Byers, would appaul the public.
The exchanges came after Mr Byers referred himself to the Parliamentary Standards Commissioner John Lyon for an inquiry into his conduct which is unlikely to be completed before the general election.
Former ministers - including Mr Byers, Patricia Hewitt and Geoff Hoon - were caught in an undercover "sting" operation for a television documentary, to be broadcast on Channel 4's Dispatches this evening.
The Business and Transport Departments issued statements denying Mr Byers' claims to an undercover reporter that he had secured secret deals with ministers.
The North Tyneside MP has himself retracted the claims, insisting he had "never lobbied ministers on behalf of commercial interests" and had exaggerated his influence.
Ms Harman said the public were entitled to be completely confident that when ministers reached a decision it was made "in the public interest and there is no impropriety whatsoever".
Civil servants in the Department of Health, one of the departments at the centre of the allegations, were satisfied they made the correct decision "in the public interest and were not responding to any inappropriate or undue influence".
In each case raised, the department had looked into the allegations and confirmed they are satisfied decisions had been made "without the impropriety alleged".
Ms Harman said: "The Prime Minister today sought the Cabinet Secretary's assurance that departments had looked into these claims. Permanent secretaries ... have assured the Cabinet Secretary that they are satisified that there has been no improper influence on Government policy or ministerial decisions.
"I want to reassure MPs and the public that ministers act in the public interest. It is an absolutely fundamental part of the duties of their office."
She said any allegation that an MP had broken the code of conduct would be investigated by the Parliamentary Commissioner for Standards and the House could impose sanctions.
"We have high standards, clear rules and clear remedy for breach."
Ms Harman said the Government had been working with the lobbying industry to set up a register of lobbyists.
"Building on this work and in the light of the latest allegations, we think this should be put on a statutory footing - that there should be a legal register of lobbyists which would require them to register as lobbyists and to register the identity of clients on whose behalf they are acting.
"This is necessary to give the public confidence that this is the law and it will be complied with."
Sir George said the statement left a number of "unresolved issues" and the fact that Ms Harman had had to make it was an indication of the "seriousness" of the allegations.
He said they threatened to become "the next big scandal in Westminster", adding: "The sight of former Cabinet ministers offering to lobby Government on behalf of corporate interests for private gain - in one case as a kind of "cab for hire" for up to £5,000 a day - will have deeply appalled the public and further undermined trust in politics at a moment when we all hoped we were turning the corner.
"The public will now expect the Government to treat these allegations with the seriousness they deserve.
"But rather than clarifying the facts, Downing Street appears to be doing the opposite."
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