Peter Bradley, the MP for the Wrekin, was accused by six Conservative MPs of blocking a planning application by Waitrose supermarket while working as a consultant for Safeways.

The allegations against Mr Bradley were made under parliamentary privilege. They follow remarks he made, also under privilege, linking the Tory party treasurer to investigations into money laundering and drug smuggling.

Mr Ashcroft strenously denies ever being involved in such activities.

Allegations 'impossible'

Mr Bradley told BBC News Online: "There never was an application by Waitrose or Safeways on Oxford Street. The site was and remains a car park."

He said there was an application for a site nearby. But he said it came before the council in May 1997 and that he resigned from the council in October 1996.

"It was physically impossible for me to do what they said I have done," he said.

Claims 'distressing'

Mr Bradley added: "Nothing prepares you for the punches below the belt. It is very distressing to have your integrity questioned by quite unfounded allegations."

Michael Ashcroft holds dual British and Belize nationality

Mr Bradley then repeated his questioning of the Mr Ashcroft's suitability "to serve as party treasurer and principal funder when he is a UK tax exile, living in Florida, running his businesses from Belize and serving as that country's UN ambassador".

Cloak of privilege

In the motion against Mr Bradley, the MPs, led by Tim Loughton, said he should "look to his own record in public life before making unfounded allegations about the business affairs of a private individual, under the cloak of parliamentary privilege".

No libel claims can be made against either side as their remarks were made in Parliament.

But Mr Ashcroft, a billionaire tax-exile, is suing The Times newspaper over similar claims to Mr Bradley's.

Tory support

His decision to take The Times to court is being backed by the Tory party.

Its party chairman Michael Ancram told the BBC: "He's the party treasurer, we have confidence in him.

"We are certainly not going to allow the sort of political vendetta being carried out by The Times and the Labour Party, as we now know, together in conjunction, to drive one of our party officials from office."

Michael Ashcroft is taking on The Times

Mr Ancram's support for Mr Ashcroft comes after a senior Tory activist called for the election of a new treasurer for the party.

John Strafford, Chairman of the Campaign for Conservative Democracy, suggested that the party treasurer should be elected rather than appointed by the party's leader, allowing Mr Ashcroft to leave the position.

In a letter to The Times, Mr Strafford wrote: "Mr Ashcroft would not stand for election (he has told me so). He could then depart the scene with dignity.

"The party board could change the constitution, but if it does not wish to then I shall move a motion at the next national convention meeting on 4 October."

Calls to refer Mr Ashcroft to the Conservative Party's own internal ethics committee by independent MP Martin Bell have been rejected by Mr Ancram.