Under-pressure Conservative co-chairman Baroness Warsi today referred herself to the Lords Commissioner for Standards amid allegations over her expenses.
A Conservative Party spokeswoman said the Cabinet minister asked Paul Kernaghan to investigate accusations that she claimed for accommodation while staying at a friend's house rent free.
Lady Warsi insisted her expenses claims were "both in accordance with the law and the spirit of the rules".
Lady Warsi today said she would co-operate with any inquiry, but declined to answer questions over whether she would resign over the row.
Speaking to ITV News during a visit to Malaysia, she said: "I take these allegations very seriously; it's why I said right at the outset that I would fully co-operate with any investigation.
"I believe that being a member of the House of Lords is a privilege. I take that privilege seriously.
"It's why I have always ensured that my conduct, including in relation to expenses and allowances, is both in accordance with the law and the spirit of the rules."
An official in Mr Kernaghan's office confirmed Lady Warsi's self-referral had been received.
The row broke out yesterday when Lady Warsi insisted she made an "appropriate payment" to her friend - Tory official Naweed Khan, who is now one of her aides - for the nights she stayed at the property in Acton, west London.
Mr Khan supported her assertion, releasing a statement saying she made a payment each time she stayed.
But the property's owner, GP and former Conservative donor Wafik Moustafa, denied receiving any income from either Lady Warsi or Mr Khan.
The peer, now a Cabinet Office minister, was claiming Lords subsistence of £165.50 a night at the time in 2008 to which the allegations relate.
A Downing Street spokeswoman said David Cameron continues to have confidence in Lady Warsi and is happy for her to remain in post during any inquiry.
The spokeswoman said Lady Warsi had not offered her resignation to the Prime Minster.
Asked at a regular Westminster media briefing whether Mr Cameron was happy for her to remain in her post during any investigation, the spokeswoman said: "Yes, he has confidence in Baroness Warsi."
She added: "Clearly this is something which she has apologised for. She said she's very happy to cooperate with any investigation, should there be one."
Former sleaze watchdog Sir Alistair Graham yesterday suggested Lady Warsi should relinquish her ministerial office until any inquiries were complete.
The ex-chairman of the Committee on Standards in Public Life, said: "At the moment it all looks very muddy and blurred and worthy of a full investigation.
"I personally am always of the view, when ministers face very serious allegations that seem to have some strength to them, then it's better that they stand down from their ministerial post while that investigation takes place, but of course that is a matter for the Prime Minister."
In a further embarrassment for Lady Warsi, the most senior Muslim politician in Britain, she was forced to admit failing to declare rental income on a London flat in the Lords register of interests.
She said the omission was due to "an oversight", adding that she had reported the letting of her Wembley flat in the Register of Ministers' Interests.
The arrangement had also been declared to the Cabinet Office and HM Revenue and Customs, she said.
The peer bought the property in 2007 but moved closer to Parliament when she became a minister in 2010, after which she began letting the Wembley flat.
In a statement, Lady Warsi said she contracted to buy the flat in September 2007, but it was not due to be ready until the following year.
In the interim she stayed predominantly at two hotels but also, for "occasional nights", at an Acton property occupied by Mr Khan.
"For the nights that I stayed as a guest of Naweed Khan, I made an appropriate financial payment equivalent to what I was paying at the time in hotel costs," she said.
"In March 2008, I moved into the flat in Wembley. As I was living in the property, it was therefore not registrable on the Register of Lords' Interests."
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