The chairman of the Committee on Standards in Public Life cited a "perceived conflict" between that position and his role as a lawyer representing her.

His statement was issued just after MPs voted to ask him to explain his original decision, although the peer's spokesman insisted that he was unaware of the move.

In his statement, Lord Neill said: "Having completed the task for which I was originally instructed, namely, obtaining leave for her to appeal to the Court of Appeal, I will not be receiving further instructions on behalf of Dame Shirley Porter.

"While the appeal raises important questions of law, I have advised her that continuing prejudicial comment concerning my representation of her would be damaging to her interests.

Looking for a new lawyer

"In the light of a perceived conflict between my two roles, such comment would also be likely to impede the work of the Committee on Standards in Public Life, of which I have the honour to be chairman.

"Dame Shirley has accepted my advice while greatly regretting the circumstances which have led to it."

Watchdog role under question

David Winnick (Lab, Walsall North), a senior member of the Home Affairs committee, said Lord Neill had taken the right decision.

But Mr Winnick said that the peer "should never have allowed himself to be put in this situation as representing, of all people, Lady Porter."

He said: "There was clearly a potential conflict of interest.

"If he had continued as counsel (for Lady Porter), then clearly there would have had to be a question mark over his continuing as chairman of the Committee on Standards in Public Life."

'Clear conflict of interest'

Lord Neill caused astonishment, reports the BBC's Jon Sopel

When it was revealed last week that Lord Neill was due to act for Dame Shirley, there were howls of protest from MPs who felt the two jobs were incompatible.

He defended his decision by saying he had accepted the case on the barristers' "taxi cab rank" principle of taking briefs as they came along, rather than choosing them.

MP Andrew Dismore (Lab, Hendon), a former leader of the Labour group on Westminster Council, called on Lord Neill to rethink his decision.

He said: "I think there must be a clear conflict of interest between his duties in looking into probity in national and local government and such a high profile case that goes to the heart of probity in local government."

'Wilful misconduct'

The "homes for votes" scandal erupted when it was alleged that Dame Shirley, former Tory leader of Westminster Council, and her deputy David Weeks had tried to rig voting in their party's favour.

The auditor found the pair guilty of "wilful misconduct" and "disgraceful and improper gerrymandering" between 1987 and 1989.

He said she had enacted a policy of moving poor tenants, who were likely to vote Labour, out of marginal council wards, and selling the properties to people more likely to vote Conservative.

She was surcharged over the scandal and last year the decision was upheld in the High Court, although the penalty was reduced from £31.6m to £27m.

The Tesco heiress vowed then that she would appeal, after receiving legal advice that she had a strong case.