The chairman of the club hosting an event at the heart of a sexual harassment scandal will stand down from a senior position at the Department for Education, the Government has announced.

David Meller was at the helm of the President’s Club, which held a men-only charity fundraiser at which a newspaper report alleged young women were paid as hostesses, groped and propositioned for sex.

The political repercussions of the event threatened to spread on Wednesday, as spokespeople for both Conservative leader Theresa May and Labour’s Jeremy Corbyn faced questions about politicians who had been there.

The Prime Minister's spokesman said she had felt "uncomfortable" reading about the dinner, while Mr Corbyn's branded it "a gross example of sexual harassment".

Education Minister Anne Milton told the Commons: “David Meller is stepping down as non-executive member for the Department for Education, and the apprenticeship delivery board and I know that [the Education Secretary] is clear that this is the right thing to do”

Ms Milton explained that people serving in public office were expected to adhere to high ethical standards and that Mr Meller’s tenure on the DoE board would come to and end following the explosive report in the Financial Times.

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Senior businessmen at the charity dinner at London’s Dorchester Hotel on Thursday are said to have inappropriately touched female hostesses who had been told to wear “black sexy shoes” and black underwear.

Jess Phillips MP, who raised the issue in the House of Commons, said: “Actually what happened was that women were bought as bait for men, who are rich men, not a mile from where we stand, as if that is an acceptable behaviour – it is totally unacceptable.”

The black-tie event, attended by 360 leading figures from business, politics and finance, allegedly included auction lots involving a free lapdance at a Soho club and plastic surgery that could be used to “add spice to your wife”.

By midnight the news report claimed that an unnamed “society figure” was telling a hostess “I want you to down that glass [of champagne], rip off your knickers and dance on that table.”

The report alleged: “Groping and similar abuse was seen across many of the tables in the room.

“Hostesses reported men repeatedly putting hands up their skirts; one said an attendee had exposed his penis to her during the evening.”

A grab from footage at the Presidents club charity fundraiser (BBC/FT)

The event was hosted by the comedian and children’s author David Walliams, who is not the subject of any allegations and is understood to have behaved correctly throughout the night.

Conservative MP Nadhim Zahawi - the newly appointed Undersecretary of State for Children and Families – was also at the dinner but said he left early, later telling news reporters : “I didn’t stay long enough to really comment on the occasion.”

Theresa May’s spokesman said: “My understanding is that Mr Zahawi clearly did attend the event. He has himself said that he felt uncomfortable at it and left at the point at which the hostesses were introduced by the host.”

He explained that the PM had not spoken with Mr Zahawi and was “not aware” of any plans for them to talk, but added: “It is safe to say that Mr Zahawi will not be attending the event in the future.”

MP for Stratford on Avon Nadhim Zahawi (PA)

Asked whether it had been a “mistake” for the Conservative minister to attend, Ms May’s spokesman said: “He probably regrets it.”

After it emerged that Labour peer Lord Mendelsohn was also at the event, Mr Corbyn’s spokesman said: “What’s been reported about this event is appalling.

“Women clearly felt threatened there, it was a gross example of sexual harassment.”