The Tories have hit back at claims by Labour minister Sir Digby Jones that he "categorically" rejected an offer to be the party's London mayoral candidate.
Sir Digby Jones will be made a peer to take up his ministerial role
Sir Digby spoke to Tory leader David Cameron two months ago when he was considering running for mayor.
He says he instantly rejected Mr Cameron's offer to be a Tory candidate as he would have had to join the party.
But a Tory spokesman insisted Sir Digby had promised to consider standing for the Conservatives.
Sir Digby has told the BBC he was sounded out about the possibility of entering the mayoral contest by business contacts.
"This group of businessmen rang me up and I said I would think about it as an independent," he said.
He said he was then telephoned by Mr Cameron over the May Bank Holiday weekend - just over a week after former BBC director general Greg Dyke rejected a Tory approach over the mayoral race.
Mr Cameron told Sir Digby it would be "fabulous" if he became the party's candidate, the former CBI chief claimed.
But he also made it clear Sir Digby would have to join the Tory party if he wanted to be their candidate.
Sir Digby said he replied "categorically not...and on that basis, it all went very quiet".
But the Conservatives disputed Sir Digby's version of events.
A Tory spokesman said Sir Digby had spoken to a "senior Tory MP" about the prospect of becoming a mayoral candidate and a phone call was set up between Mr Cameron and the former CBI chief.
"Although he expressed a preference to stand as an independent, he definitely said he would consider standing as a Conservative candidate," a Tory spokesman said.
"His attempt to deny this is a rather desperate attempt to be loved by the Labour Party."
Sir Digby is one of a string of non-Labour figures to be drafted into Gordon Brown's first government.
He is to be made a peer and will work as trade promotion and investment minister in the department of Business, Enterprise and Regulatory Reform.
He will sit on the Labour benches in the House of Lords and will be expected to vote with Labour peers but he has refused to join the party.
He has upset some in the Labour ranks after saying he hoped the party would become "less in thrall" to the unions.
At a regular meeting of Labour peers on Wednesday night there was "a lot of disquiet" expressed about his appointment, BBC Newsnight's Michael Crick reported.
But Labour has seized on Sir Digby's apparent rejection of Mr Cameron to attack the party over its quest to find a well-known candidate to take on Labour's Ken Livingstone in London next year.
A Labour spokesman said: "Digby is one in a long line of people linked with the Tories' desperate search to find someone who wants to be their candidate for London mayor.
"Digby clearly believes that the nation is best served by working as a minister in Gordon Brown's government."
Tory higher education spokesman Boris Johnson is the latest figure to be linked with the Tory mayoral candidacy, although the party still plans to push ahead with a series of public votes over the final decision.
Applications to be the Tory candidate have to be in by 16 July.