Chancellor Alistair Darling is to repay about £700 of expenses following fresh allegations about his allowances.
The Daily Telegraph says he claimed for costs on a flat in south London while claiming allowances on his grace-and-favour home in Downing Street.
Mr Darling said it was "untrue" he had claimed for two properties at once but would repay the flat's service charges for September to December 2007.
The Lib Dems say Mr Darling should be sacked over his expenses claims.
He has also faced questions about changing his designated second home - on which MPs can claim expenses - four times in four years and why he claimed for tax advice.
Gordon Brown said Mr Darling had made an "inadvertent" mistake and was doing a "great job" as chancellor but would not be drawn on speculation he might be moved in an expected cabinet reshuffle.
But the Liberal Democrats argue that, as the guardian of the nation's finances, his own claims have to be beyond reproach.
Lib Dem Treasury spokesman Vince Cable repeated his leader Nick Clegg's calls for Mr Darling to go, telling BBC Scotland that the chancellor must be seen to have "moral authority, not just operating within technical rules, by the financial community and the country at large".
If he had done anything wrong he would be the first to admit it
And shadow chancellor George Osborne said Mr Brown was "dithering" over the chancellor's future.
"It seems as if Alistair Darling has been about as careful with his own finances as he has been with the nation's finances but I think Gordon Brown does need to clear up the situation," he said.
"Either he's backing Alistair Darling, or he needs to sack him. We can't have a lame duck chancellor in the middle of a recession."
The Daily Telegraph reported that in July 2007, the month after he became chancellor, Mr Darling submitted a claim of £1,000 for the service charge on his London flat for the period to December 2007.
But in September 2007 he moved into the chancellor's grace-and-favour home and made claims for food costs while living there.
Mr Darling said the service charge was paid in advance at six-monthly intervals. In October the flat had been let and a tenant had moved in. He added: "When I reclaimed the cost of the service charge in July I was living in the flat.
Gordon Brown: "I'm the guardian of people's money"
"However, because the service charge covered the period beyond September until December I will repay the service charge from September to December."
Later Mr Brown told Sky News Mr Darling did "a great job" as chancellor: "Where a mistake was pointed out to him - and I think it was inadvertent - he acted immediately.
"He has paid back the money now so there is no doubt what his course of action would be in these circumstances."
The prime minister's spokesman said "of course" Mr Brown still had full confidence in the chancellor.
The Daily Telegraph had already reported that Mr Darling switched his designated second home four times in four years and claimed £1,400 for help filling in his tax return over two years.
The chancellor has always said his use of allowances were within the rules.
But Bob Thomson, a former chairman of the Scottish Labour Party, said Mr Darling's conduct had been "reprehensible" and it was a resigning matter.
"What particularly concerned me was this 'flipping' houses four times in four years. My view here is Alistair is particularly culpable in respect of this. He is the person in charge of our tax regime and should be cleaner than clean."
Commons leader Harriet Harman told BBC Radio 5 Live that all claims had to be investigated, regardless of politicians' status.
"It's got to be the same whether you're a back bencher, or whether you're the chancellor of the exchequer, the same rules have got to apply to you," she added.
"We set the taxes so we've got to pay them. We make the laws so we've got to abide by them."
Several cabinet ministers, including Mr Darling, Geoff Hoon and Hazel Blears have all faced questions about the "flipping" of their second homes.
Asked why rules had been changed in 2004 to allow ministers to designate properties outside London as their second homes - Mr Brown denied it had been a way for them to make money.
"I totally reject that .. that is just a ridiculous assertion and it is not true," he said.
The then chancellor said there had been "no pressure from the Treasury" for the change adding: "I had nothing to do with it. I was never involved in this."
The Telegraph also reports that former Conservative leader, Michael Howard, claimed more than £17,000 for "gardening services" at his second home in Kent over four years.
Mr Howard said the report was not true and the claim was for a variety of maintenance costs, including work done to his home. He insisted the claim was within the rules.
He told the BBC he was the "31st cheapest" MP in terms of expenses claimed and accused the Daily Telegraph of lying during their investigation of his claim.
Conservative leader David Cameron has repeated calls for an early general election so that voters can get rid of politicians who have been caught up in the scandal.
But Mr Brown said the allowances of all MPs should be scrutinised and any members who were guilty of wrongdoing would be subject to "due process" before a general election so voters could have all the information needed to judge them.
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