AN investigation has been launched by Labour into claims Wirral South MP Ben Chapman was given permission by House of Commons authorities to claim taxpayer-funded allowances for loan interest he was no longer paying, a Downing Street political spokesman said.

The Daily Telegraph said correspondence showed the MP sought and was given permission to reclaim the interest payments on the full value of his original mortgage despite paying off £295,000 of the loan in 2002.

He allegedly benefited by £15,000 over 10 months from the arrangement, which documents suggested was not unique to him, the newspaper said.

A Number 10 political spokesman said: "The Chief Whip has spoken to Ben Chapman.

"He is investigating documents provided by Mr Chapman and will seek further clarification from him and the Fees Office in the morning."

The Telegraph, which has obtained the detailed expense claim files of MPs, said Mr Chapman had told the Fees Office he was paying off the sum on his second home in south London.

That move cut his monthly interest payments, which can be claimed back in Additional Cost Allowance, from £1,900 to £400.

But Mr Chapman allegedly told the Fees Office: "By paying off capital I am forgoing interest and investment opportunities elsewhere," the newspaper said.

The document said that he and an official "thus agreed that the mortgage should remain for ACA (Additional Costs Allowance) purposes at the original amount".

It also published part of an email between officials discussing Mr Chapman’s arrangement which appeared to show other MPs were allowed to do the same.

Such arrangements were said to have been stopped when it was decided they should not have been allowed but no investigation was held into them, the Telegraph said.