Sadiq Khan, the Labour MP allegedly bugged as he visited a constituent in jail, has welcomed a Commons inquiry into the allegation.
Justice Secretary Jack Straw ordered the probe into claims anti-terror police bugged a conversation with Babar Ahmad at Woodhill Prison.
The Tooting MP said he was "pleased" an inquiry had been ordered quickly.
Downing Street has denied Conservative claims that Gordon Brown was warned weeks ago that an MP was being bugged.
Mr Khan said he had been visiting Mr Ahmad, who the US wants to extradite on suspicion of running websites raising funds for the Taleban, as part of his constituency work.
Speaking on BBC One's Andrew Marr Show, Mr Khan said: "Clearly I'm concerned, and that's why I'm pleased that the Secretary of State for Justice Jack Straw - as soon as he heard about these allegations yesterday - has ordered an inquiry.
"And I'm obviously as keen as your viewers will be to find out whether the allegations are true because the implications clearly are quite serious."
Mr Straw said: "It is completely unacceptable for an interview to be conducted by a MP on a constituent matter or in any other issue to be recorded."
The Sunday Times reports that officers from Scotland Yard's anti-terrorist branch bugged visits by government whip Mr Khan to the Milton Keynes prison in 2005 and 2006.
Mr Ahmad faces no charges in the UK and is awaiting a decision from the European courts to discover if he will be extradited to the US.
Shadow home secretary David Davis said he had warned the prime minister weeks ago a Labour MP was being bugged - but received no reply nor any indication action had been taken.
The US is currently seeking to extradite Babar Ahmad
Mr Davis said he had been passed information that security services were tapping an MP's conversations and asked if it meant the "Wilson Convention" - a principle established in 1966 barring bugging of MPs - had been abandoned.
But a Downing Street spokeswoman denied ever receiving a letter from Mr Davis on the issue adding: "Consequently, the prime minister had no knowledge of the claims."
Officials working for Mr Straw said he was informed on Saturday.
Scotland Yard said it was not prepared to comment on the claims.
The Commons home affairs committee will investigate the allegations as part of their inquiry into whether the UK is becoming a "surveillance society".
Committee chairman Keith Vaz told the BBC that if the allegations were true they would take the surveillance society into an entirely new dimension.
HAVE YOUR SAY
Given the way some MPs act in this day and age I'd say it was about time the law was changed to allow bugging of their conversations.
International Development Secretary Douglas Alexander said the allegations relating to Mr Khan were "extremely serious".
He told BBC One's Andrew Marr Show: "I think there will be deep concern on all sides of the House of Commons if these allegations prove to be founded."
A spokesperson for Babar Ahmad's family said: "It is outrageous ... that the authorities felt the need to bug an innocent welfare visit by his MP. We would like an investigation to be carried out to get to the bottom of this kind of misconduct."
And Shami Chakrabarti, the director of Liberty, said: "This is the kind of inquiry that should take days and not weeks - there are no complex forensics, there is no need to interview dozens and dozens of witnesses.
"There should be a very simple paper trail. When was this authorisation? How high up the line did it go - was it ministerial, was it prison governor level or were the police doing this by themselves? And what on earth was the justification for this kind of listening operation?"