Mr Fitzpatrick responded by saying: “As Cllr Dowd is chair of the authority, it was felt that the press reports had harmed the reputation of the authority and on this basis it was considered that the authority should fund the legal costs associated with protecting the organisation’s reputation.

“The expenditure for the legal advice is within Neil Scales’s expenditure limit approvals, as chief executive of the Authority, and so no further approvals were necessary to approve this expenditure.”

It is not clear exactly how much Merseytravel has contributed to the legal case, and the transport authority refused to discuss the matter with the Daily Post.

The row flared up after Cllr Makinson, who represents Picton ward, in Liverpool, issued a press release in which he hit out at Cllr Dowd’s spending on the Merseytravel credit card.

Cllr Dowd used the credit card to pay for his attendance at Labour Party conferences, theatre tickets and for items while on a trip to the USA.

Merseytravel has always insisted all personal spending on the credit card had been reimbursed under a pre-existing agreement.

But that did not stop critics, including Cllr Makinson, questioning why such personal spending should be placed on a publicly-funded credit card and why the taxpayer should pay for the Labour leader to attend his own party conferences.

The Barclaycard account, which senior Merseytravel executives also use regularly, has a monthly limit of £35,000.

A Merseytravel spokesman said: “We have no comment to make until the conclusion of legal matters.”