Labour has suspended two local councillors who are accused of paying for people to join the party.

Following a meeting last night, Pervaz Khan and Derek Loughborough, who sit on Middlesbrough Council, were placed on "administrative suspension".

It is claimed that the pair recruited people to join the Labour Party after paying their initial subscription fees.

The investigation is being carried out by the Labour North Regional Office.

A Labour North spokesman said: "Councillor Khan and Councillor Loughborough have been placed on administrative suspension from the Labour Party as part of an investigation into concerns regarding recruitment of members to the Labour Party in Middlesbrough.

"It would be inappropriate to comment further at this point."

There are parallels with the row in Falkirk, where the Unite union is alleged to have paid for as many as 100 of its members to join the local Labour Party to influence the selection of its preferred candidate at the next general election.

Leader Ed Miliband has ordered an investigation into the Falkirk issue and the police have been called in to investigate possible fraud.

The situation in Middlesbrough is different, a local source said, as local MP Andy McDonald will definitely be the Labour candidate at the next election, having taken the safe seat in a by-election in November.

There was speculation that any alleged payment to boost local membership could have been motivated by a desire to build a local power base, or influence the selection process for council positions.

Mr Khan represents the Middlehaven ward while Mr Loughborough represents North Ormesby and Brambles Farm.

Mr Loughborough said: "I would like to make no comment. It's an internal thing and it's getting sorted out internally."

Mr Khan was unavailable for comment.

Councillor Charlie Rooney, leader of the council's Labour group, declined to comment, saying the matter was being handled regionally.