Three former ministers have been suspended from the Parliamentary Labour Party "for bringing it into disrepute".
Stephen Byers, Patricia Hewitt and Geoff Hoon are under investigation over their apparent willingness to help a lobbying firm in return for cash.
They were secretly filmed by the Channel 4 programme Dispatches, but have denied any wrong-doing.
Tory leader David Cameron said people were "disgusted" and Justice Secretary Jack Straw said MPs felt "anger".
Newsnight's Michael Crick reports.