He paid off the mortgage on his Scunthorpe home in March 2006, but carried on claiming until late in 2007, when he started declaring his London hosue as his second home.
He then claimed for the mortgage on his London house for four months, while he was renting it out to a fellow Labour MP, Ian Cawsey, for £1,000 a month, it is alleged in today's Daily Telegraph. Mr Morley told the newspaper that he has repaid some of the money. "I have made a mistake, I apologise for that and I take full responsibility. My priority was to repay and if I suffer financially as a result of that, I have only myself to blame," he said.
The allegation is the most serious yet to emerge during seven days of highly damaging revelations about MPs' expenses which, MPs now acknowledge, have caused lasting damage to the reputation of Parliament.
It was also alleged that the Labour MP Fabian Hamilton declared his mother's home as his main residence while claiming thousands of pounds towards a second home in his Leeds North-East constituency. On one occasion, he pleaded for his expenses to be paid quickly so that he would not become "destitute".
The Telegraph reported that Mr Hamilton spent thousands of pounds doing up his Leeds home before "flipping" his declared second home to a new flat in Maida Vale, north London. Shortly before the move, he claimed the £4,400 cost of installing a boiler at his family home, before charging for a £5,000 kitchen in the London flat.
In 2004, Commons officials discovered that he had not only claimed for his mortgage, but for the cost of improvement works that increased the value of his house, which was against Commons rules.
An internal memo written by a Commons official, obtained by the Telegraph added: "Mr Hamilton would like to speak to someone in authority who would be able to give him a response as to whether he can claim for the full payment or how he can 'if he has to' pay back the £2,850.36 that he has overclaimed."
He offset about £1,950 of the overpayment by submitting receipts for furniture, including a TV, which he had bought for the house, while agreeing that £900 could be docked from his next month's claim to cover the rest.
Yesterday, 20 MPs from all parties scrambled to pay back a total of more than £100,000 in expenses in a belated attempt to restore Parliament's battered image. The Government Chief Whip, Nick Brown, held a series of one-to-one meetings with Labour backbenchers who fear they are about to be accused of making questionable claims.
Any MP who refuses to return payments deemed excessive by a new independent anti-sleaze panel could have their wages docked in order to refund the money.
It emerged that Gordon Brown personally asked Hazel Blears, the Communities Secretary, to pay more than £13,000 after she avoided paying capital gains tax (CGT) when she sold her London flat. It was her second home for her MPs' allowances but her main residence for tax purposes.
Although Ms Blears insisted that she made her decision, ministerial sources said Mr Brown was worried that Labour was being outflanked by the Tories after David Cameron ordered several members of his Shadow Cabinet to give back some of the money they had claimed.
But there were signs of a Tory backlash against Mr Cameron's crackdown. Douglas Hogg, the former agriculture minister accused of using his MP's allowance to maintain his country estate, said the Tory panel which will investigate claims by the party's MPs was not the right body to make decisions on repayment.
Ann Widdecombe, the former Tory Home Office minister, said MPs needed support to run a second home, and warned of a "competition of my shirt is hairier than yours". She said: "We don't want to go back to the days when the only people who can afford to sit in Parliament are the privately wealthy or the trade union-supported."
Phil Hope, the Health minister, announced he would be returning £41,709 in taxpayer-funded expenses claimed for furniture, fittings and other items for his second home. In an emotional TV interview, he said: "The anger of my constituents and the damage done to perceptions of my integrity concerning the money I have received to make my London accommodation habitable has been a massive blow to me that I cannot allow to continue."
John Maples, a former Conservative deputy chairman vigorously defended himself against the Telegraph allegations last night. He was accused of declaring the RAC Club in Pall Mall, in central London, as his main home, while submitting "lavish" claims for his constituency home. Mr Maples said that he had sold his London home and was buying another, but there was a delay during which he spent one month living in the club. He had informed the fees office of his circumstances.
The chairman of the Parliamentary Labour Party, Tony Lloyd, urged all Labour Mps yesterday to publish their expenses on the internet without waiting for the Commons to publish them next month.
The latest allegations
* Elliot Morley, former Labour Environment Minister, claimed £16,000 for a mortgage on a property that had already been paid off. He paid the sum back a fortnight ago, apologising for not keeping a "tighter rein".
* Conservative MP Stephen Crabb claimed his main home was a room in a flat rented by another MP after buying a new family home in Wales, claiming £9,300 in stamp duty.
* Labour MP Fabian Hamilton declared his mother's home in London as his main residence, allowing him to claim thousands of pounds to improve his family home in Leeds.
* John Maples, deputy chairman of the Conservative Party, is said to have named a room in the RAC private members' club in Pall Mall as his main home. He denied the allegations, saying that he named the club as his residence for a month while he was between moving homes.
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