Charity concert aimed to help Kurdish refugees
The peer was jailed last week after being found guilty at the Old Bailey of perjury and perverting the course of justice.
Since then there have been allegations that money has gone missing from the fund, called Simple Truth, which was set up by Archer in 1991 to help Kurdish refugees after the Gulf War.
Former Conservative Party vice chairman Baroness Nicholson said "practically nothing" of the £57m Lord Archer said he collected had reached the Kurdish people.
She has lodged an official complaint with Scotland Yard and the Serious Fraud Squad.
The centrepiece of the fundraising effort was a concert at London's Wembley Arena, which included stars such as Paul Simon and Sting and drew a worldwide audience of 50 million.
Baroness Nicholson, who left the Tories to join the Liberal Democrats in 1995, told the BBC she remained "very confused" over how much money was raised for the Kurds.
She told BBC Radio 4's Today programme: "My concern is how much raised reached the Kurdish people and they came to me in 1991 and 1992 and have commented subsequently that they received precious little if any at all of this huge sum of money.
"That wonderful concert with Sting, every rock star one had ever heard of and a lot one hadn't and the Princess of Wales.
"It should've been possible to make a fortune and they said it was. They said they did it. Where are the funds?"
Exaggeration
A Scotland Yard spokesman confirmed police had received a letter from Baroness Nicholson.
"The Metropolitan Police Service is carrying out a preliminary assessment of the facts," he said.
Archer's unofficial biographer Michael Crick told BBC News 24 he did not think the novelist had embezzled the money from the Kurdish fund.
He said the problem was that Archer always claimed to have raised £57m, which was a gross exaggeration.
He said someone else may have embezzled some of the funds and Archer should have kept a closer eye on the money raised.
Archer was jailed for four years for perjury and perverting the course of justice during his successful 1987 libel action against the Daily Star over its story that he slept with a prostitute.
The jailed peer also faces investigation by the Inland Revenue for tax evasion in the 1980s.
The Daily Star newspaper is also trying to recover damages paid during the original libel case, court costs and interest, adding up to £2.2m.
On Sunday, the leader of the Commons, Robin Cook, confirmed the government was planning a change in the law which could lead to Archer losing his peerage.
He said he wants to end the anomaly whereby convicted criminals were barred from the Commons, but not the Lords.