The Lords Commissioner for Standards is considering whether to investigate allegations over under-pressure Conservative co-chairman Baroness Warsi's expenses.
The Cabinet minister asked Paul Kernaghan to look into accusations she claimed for accommodation while staying at a friend's house rent free, a Conservative Party spokeswoman said.
Prime Minister David Cameron backed Lady Warsi, who insisted her expenses claims were "both in accordance with the law and the spirit of the rules".
Mr Kernaghan will carry out "a preliminary assessment" before deciding the next course of action.
Lady Warsi said she would co-operate with any inquiry, but declined to answer questions over whether she would resign over the row.
Speaking to ITV News during a visit to Malaysia, she said: "I take these allegations very seriously; it's why I said right at the outset that I would fully co-operate with any investigation.
"I believe that being a member of the House of Lords is a privilege. I take that privilege seriously. It's why I have always ensured that my conduct, including in relation to expenses and allowances, is both in accordance with the law and the spirit of the rules."
Standards Commissioner Mr Kernaghan, who took up his role in June 2010 following a series of peers' expenses scandals, was invited to investigate allegations which surfaced over the weekend.
The row broke out when Lady Warsi insisted she made an "appropriate payment" to her friend, Tory official Naweed Khan, who is now one of her aides, for the nights she stayed at the property in Acton, west London. Mr Khan supported her assertion, releasing a statement saying she made a payment each time she stayed. But the property's owner, GP and former Conservative donor Wafik Moustafa, denied receiving any income from either Lady Warsi or Mr Khan.
In a further embarrassment for Lady Warsi, the most senior Muslim politician in Britain, she was forced to admit failing to declare rental income on a London flat in the Lords register of interests. She said the omission was due to "an oversight", adding that she had reported the letting of her Wembley flat in the Register of Ministers' Interests. The arrangement had also been declared to the Cabinet Office and HM Revenue and Customs, she said.