It is just now an embarrassment to the government and an embarrassment to Britain

Francis Maude

But new allegations at the weekend, this time concerning financial irregularities in the funds of his local Leicester East constituency Labour Party, have led to further calls for him to go.

Downing Street and senior ministers have moved to bolster the embattled minister's position, saying he has done nothing wrong.

But the Conservatives said the continuing controversy surrounding Mr Vaz is "embarrassing for Britain" and have called for the minister's resignation.

Allegations denied

The Labour Party denied weekend reports that �15,000 given to Mr Vaz as an election donation had gone missing. Mr Vaz also issued a statement rejecting the claims.

Robin Cook defended Mr Vaz

That allegation followed the news that Mr Vaz had used the Foreign Office to host a meeting between an Asian restaurateur - also a Labour backer - and an insurance company to help settle a disputed claim between the two.

The Foreign Office confirmed that the meeting took place but denied that it broke the ministerial code of conduct.

Mr Vaz's financial affairs then came under further scrutiny when it emerged that he was on the verge of buying a �900,000 home in central London. He subsequently withdrew from the deal.

Newspapers questioned how Mr Vaz could afford the four-storey Pimlico property on his ministerial salary of �34,326 on top of his MP's salary of �48,371.

'Unexplained dealings'

Tory Party chairman Michael Ancram called it the "latest in a string of unexplained dealings" surrounding the minister for Europe.

Mr Vaz has also been criticised for refusing to discuss his relationship with the Hinduja brothers until the official inquiry by Sir Anthony Hammond QC into how Srichand Hinduja was granted British nationality is completed.

A Labour spokeswoman dismissed reports that party chiefs had ordered Mr Vaz to clear his name in days or quit his ministerial post.

"We are fully satisfied with the explanation he has given," she said.

Srichand Hinduja: His passport application lies at the heart of the saga

And Downing Street has insisted that Mr Vaz has done nothing wrong. The prime minister's official spokesman said on Monday that all of the allegations had been rebutted and "the fact that the newspapers keep repeating them doesn't make them any truer".

But Conservative foreign affairs spokesman Francis Maude said the affair was damaging Britain's reputation abroad.

"I would have thought it is just now an embarrassment to the government and an embarrassment to Britain and the sooner it is ended the better."

Stout defence

Chancellor Gordon Brown and Foreign Secretary Robin Cook have also given Mr Vaz their backing.

Mr Brown defended the minister for Europe saying: "Keith Vaz has issued point by point rebuttals."

On Sunday, Foreign Secretary Robin Cook launched a stout defence of his junior minister.

Mr Cook called for an end to the "unedified and unjustified hounding" of Mr Vaz.

He added: "Keith Vaz has done an excellent job as Europe minister and indeed, let's be frank, that is why some of the papers are out to get him."

Mr Cook said there was no evidence that Mr Vaz had acted improperly.

I am not going to stand by and have my career destroyed

Peter Mandelson

But the Conservatives said Mr Cook's need to comment on the affair served to show the extent of Mr Vaz's difficulties.

Meanwhile Peter Mandelson, who last month resigned in disgrace from the cabinet for a second time in two years, has arrived back in London.

The former Northern Ireland secretary said he had written thousands of words in defence of claims that he lied about contacting a minister over a passport application by one of the Hinduja brothers.

Mr Mandelson said he intends to submit the papers to Sir Anthony Hammond QC, who is holding an inquiry into the affair.

"I am not going to stand by and have my career destroyed - and that is what will happen if the truth doesn't come out."