Scott Morrison is standing by the embattled minister for emissions reduction, Angus Taylor, despite New South Wales police launching an investigation into the origins of an altered document used to attack the Sydney lord mayor, Clover Moore.

The prime minister told parliament on Tuesday, after a conversation with the NSW police commissioner, Mick Fuller, there was no need to take action against Taylor at this time.

Taylor is under pressure from Labor to vacate his portfolio after the NSW police confirmed they were investigating an altered version of a Sydney City Council report that formed the basis for the minister’s political attack on Moore.

New South Wales police have contacted the City of Sydney requesting information about downloads of its 2017-18 annual report after Taylor relied on an altered version to lash Moore over the council’s carbon footprint and accuse her of hypocrisy.

A NSW police spokesperson said the investigation was in the early stages and detectives from the state crime command’s financial crimes squad had launched Strike Force Garrad to determine if any criminal offences had been committed.

The doctored document, which contained grossly inflated travel figures for the 10 city councillors – it claimed they had spent $15m in a year – was quoted in a letter sent by Taylor to Moore on 29 September and provided at the same time to the Daily Telegraph, which used the figures in an article published the same day.

When Moore complained about the article, the minister’s office sent the journalist a copy of the inaccurate document to back up Taylor’s claims of profligate spending by the council.

But these figures did not accord with the figures in the annual report for 2017-18, which was published on the City of Sydney’s website. The council later produced metadata showing the reports had been unaltered since being first uploaded.

News of the police investigation broke as MPs in Canberra gathered for question time, and Labor went on the offensive, demanding that Taylor vacate his position until police had completed their inquiries.

Labor directed most of their questions to Morrison, who appeared on the back foot at news of the police inquiry, but Taylor also faced a grilling about whether he would supply all relevant documentation to the authorities.

Taylor told the chamber he intended to cooperate with the investigation and he repeated his previous statements that neither he, nor “any members of my staff, altered the documents in question”. It is understood the police have not yet spoken to Taylor.

Scott Morrison during question time. Photograph: Mike Bowers/The Guardian

Morrison said he intended to have a conversation with the NSW police commissioner to better understand the nature of the investigation.

The Labor leader, Anthony Albanese, said the former Liberal frontbencher Arthur Sinodinos had stepped aside when there was an investigation into his conduct by the NSW Independent Commission Against Corruption.

“He stepped aside voluntarily,” the Labor leader told reporters after question time. “This minister cannot survive this day. The prime minister needs to stand him aside today.”

Albanese said the government’s plan was to stonewall during the final parliamentary sitting fortnight for the year, but the police probe made that untenable. He said Labor would continue to pursue Taylor, and the unanswered questions about the document. “If [the prime minister’s] ministerial standards mean anything at all he should have stood aside this minister well before now.”

Asked by reporters why he wouldn’t accept Taylor’s assurances that neither he nor his staff altered the document, Albanese said the minister had said the document with the incorrect travel figures came from the council website, but there was no evidence that was the origins of the document.

“He can’t continue to do what he has done which is to express contempt for the parliament.”

Taylor has insisted in parliament that the altered version was downloaded from the City’s website.

He has refused to say who downloaded it or to explain how he came by it, although he has now apologised to Moore and acknowledged the figures in his letter were wrong.

Following the Guardian’s revelations about the doctored document on 25 October, Labor called for a police investigation.

The council confirmed to the Guardian it had been contacted by police and would be cooperating.

Earlier on Tuesday the Guardian reported the environment and energy department had blocked access to two emails about Taylor’s use of incorrect figures to attack the City of Sydney’s travel spending, claiming they were exempt from freedom of information because they related to an unspecified “ongoing process”.

In response to Labor’s FOI request, the department has refused access to two emails sent at 8.52am on 25 October – the day after Guardian Australia revealed the controversy – and a second email chain at 3.23pm the same day.

Labor’s climate spokesman, Mark Butler, said the public had the right to know “what the process is and what is its purpose”, accusing Taylor of being “loose with the truth” and avoiding scrutiny.

Taylor’s office also blocked a second request seeking documents about the incident on “practical” grounds, citing the fact that “more than 200 documents have been identified that fall within the scope of the request”.