Timothy Kirkhope lost his seat in the general election

Mr Hinduja was given a passport by Labour in November 1997.

During his time at the Home Office Mr Kirkhope had special responsibility for immigration, nationality, the UK Passport Agency, extradition and international police issues.

He reportedly told The Times that he had received the billionaire businessman's application while he was in the post.

"I'm pretty sure that this was one of the ones that went through to officials and were left to officials when we left office," Mr Kirkhope is quoted as saying.

No favours

He said he had done nothing wrong by taking a job with the Hindujas and the work he did was essentially linked up to infrastructure issues.

"I had nothing to do with any of their other interests, such as the Dome," he is reported as saying.

"I was certainly not involved in government affairs. What I did there was perfectly proper."

A spokesman for the Hindujas insisted Mr Kirkhope advised them only about water and power projects in India.

A Conservative Central Office spokeswoman added: "The key point in this whole affair is that the Conservative Party has never traded passports for favours. We didn't give the Hindujas passports."

Mr Hague attended the Hindujas' party last year

It is the passport application of Gopichand's brother Srichand that is at the heart of the controversy that last week forced the resignation of Peter Mandelson as Northern Ireland secretary.

Srichand Hinduja was also given a passport by Labour, a few months after donating �1m to the ill-fated Millennium Dome.

Mr Mandelson has denied attempting to influence the handling of the passport application with the Home Office and an inquiry is now examining the matter.

The saga embroiled the Conservatives this week when it emerged that Tory leader William Hague did not declare that a reception thrown in his honour by the brothers was used to raise funds for the party.

The Tories have insisted that the event did not need be declared in the Commons register of members interests because it was not held to benefit one person.

Despite raising questions over the acceptance of the Hindujas' hospitality by Labour figures, the Tories insisted Mr Hague had done nothing wrong.