Mr Duncan Smith has threatened to sue over allegations

Mr Duncan Smith said he "totally rejected" claims he wrongly employed his wife during his first year as party leader.

He spent an hour with Parliament's standards watchdog Sir Philip Mawer on Monday, going through the issue with him.

Sir Philip earlier said a document containing the claims, handed to him by journalist Michael Crick, "needed to be looked at".

His role is basically as a House of Commons "sleazebuster" Q&A: MPs' watchdog

In his statement, Mr Duncan Smith insisted: "I totally reject claims... that I was guilty of financial wrongdoing in the employment of my wife as a diary secretary after I became Conservative Party leader.

"In support of my case, I am putting forward signed statements by myself, by my wife and by four named people who worked in my office during the period in question."

Tory deputy leader Michael Ancram blamed the claims - which surfaced just ahead of last week's Conservative conference - on "malevolent forces" within the party.

Mr Duncan Smith's document said his wife had signed a contract to work for 25 hours a week, but worked considerably longer.

She was paid no more than �15,000 until she ceased her job at the end of 2002, and in the last year received a total of �11,000, it said.

The inquiry into the affair could last weeks and will inevitably hang over the Tory leader as the plotters now decide whether or not to move in for the kill The BBC's Nick Assinder IDS takes on 'malevolent forces'

The statement said a lot of her work was done at home, and in the evenings or at weekends, and had been "essential".

Mr Ancram said he had read the evidence and was "satisfied" that "everything that was done was within the rules of Parliament".

The deputy leader added that Mr Duncan Smith intended to "pursue" legally those people who had made the claims.

And he said the accusations were "part of a malicious attempt to try to undermine" the Tory leader.

Earlier Mr Crick, a freelance journalist who also works for the BBC, said: "A number of senior Tories have made serious allegations to Newsnight over the last few months about the way in which Iain Duncan Smith employed his wife...

"Given the nature of the sources and the allegations they are making, plus other evidence that we have gathered, and given Mr Duncan Smith's threats to sue, I felt the best course of action is to take this to the Parliamentary Standards Commissioner.

'Plotters'

"It now seems that Mr Duncan Smith has decided the same thing and let's hope that he [Sir Philip] can resolve it."

Meanwhile Vanessa Gearson, the senior Tory aide who first raised concerns about Mr Duncan Smith's employment of his wife, was thought on Monday to be in discussions with party officials.

The Tory chief whip David Maclean is already prepared to issue written warnings to those MPs suspected of plotting against their leader.

MPs return to the Commons on Tuesday with some Conservatives still believed to be hoping to trigger a no confidence vote in their leader.

BBC political correspondent Carol Walker said Mr Duncan Smith's critics could use the latest row as further ammunition against him.

"But if he's cleared of any wrongdoing it could strengthen his position," she said.