John Sergeant: "Labour government is no longer immune to political scandal"

The former Welsh secretary's car was recovered by police on Wednesday morning in Brixton, south London.

Mr Davies resigned his cabinet post on Tuesday after admitting to an error of judgement.

He is still deciding whether to quit as Labour leader in Wales.

Political Editor Robin Oakley: Curious questions remain

Downing Street has emphatically denied any sex or drugs scandal but admitted that the facts of the case were "bizarre".

The prime minister's official spokesman said: "There is no evidence of any gay link or any drugs link.

Reporters call at Ron Davies' home

"There are no salient facts in our possession that are not in yours. Ron explicitly denied any sexual element."

Mr Davies is facing growing calls for him to abandon the post of Labour leader in Wales after his shock resignation from the cabinet.

But sources close to him say he still wants to carry on as prospective leader of the Welsh Assembly.

'Intelligent questions' asked

BBC Wales Correspondent Wyre Davis assesses the reaction to Ron Davies' resignation in Wales

The Caerphilly MP has gone away with his family to consider his position, Tony Blair's spokesman said.

"The prime minister thinks Ron is entitled to a day or two to take stock," he said.

Ron Davies after winning the election as Labour Welsh leader

Mr Davies is due to travel back to his constituency later this week to discuss his political future with local party members.

The spokesman said all the "intelligent questions" were put to the former Welsh secretary, but Mr Blair took the view that the error of judgement in going off in a car with strangers was itself enough to justify resignation.

Hague: Questions need answers

Opponents say if Mr Davies's "error of judgement" was serious enough to force him out of the cabinet job, it should also preclude his holding the top job in Cardiff.

Nicholas Jones: Davies situation is first test of government skill in crisis management

The Conservative leader, William Hague, said: "It's not clear what has caused Mr Davies immediately to resign from the cabinet but not as the Labour leader for the elections to the Welsh Assembly. And I think we all need to know the answers.

"I think it would have been wiser for Downing Street to have made clear the answer to that from the very beginning, rather than have it dragged out of them over time, which is presumably what will happen."

Robbed by dreadlocked man

Mr Davies is the first member of Tony Blair's Cabinet to resign, following an incident near Clapham Common, where he befriended a stranger and was later robbed at knifepoint.

Ron Davies talks to the BBC's John Sergeant about his resignation

He said he was approached by a man, and after talking for a few minutes, agreed to go to his home for dinner. On the way, they picked up two friends, a man and a woman.

He said: "Shortly afterwards, the man produced a knife and together with his male companion, robbed me and stole my car, leaving me standing at the roadside."

'Scandal' mystery

Speculation in newspapers focuses mainly on the fact Clapham Common is a known gay pick-up area, but it is also used by drug dealers.

If Mr Davies pulls out of the Assembly post, the government could face a fresh ballot.

He was favourite to become first secretary after winning the party vote in September to head the Labour group.

Jack Cunningham: A personal tragedy for Ron Davies but the business of government goes on.

Cabinet 'enforcer' Dr Jack Cunningham told the BBC it was for Mr Davies himself to decide whether to give more details. He denied the government was withholding anything.

It's a tragedy for Ron Davies, says Jack Cunningham

He acknowledged speculation would continue and said it was also for the police investigating the crime to decide whether to give more details. Mr Davies and the prime minister had a long conversation at which he, Mr Cunningham, was not present.

He said: "I think it's a personal tragedy for Ron Davies and his wife."