Scotland Yard has confirmed it will reopen an investigation into allegations that Denis MacShane, a former Labour MP, made fraudulent parliamentary expense claims.

The former minister for Europe resigned as Rotherham MP last year after admitting using fake receipts to claim more than £7,000 of expenses from the public purse. Detectives will look again at MacShane's claims, which follow last year's damning report by the parliamentary standards watchdog, after consultations with CPS lawyers.

The development will be of deep concern to MacShane, a gregarious, lifelong Labour supporter who had hoped his resignation and apology in November would have resolved the matter.

A Metropolitan police spokesman said on Monday: "We can confirm that following an assessment of the report published by the standards and privileges committee, and following liaison with the Crown Prosecution Service, the Metropolitan police is reopening the investigation."

Between 2004 and 2008 MacShane claimed up to £950 for research and translation costs to pay the European Policy Institute (EPI) with 19 separate invoices. The total amount claimed was £12,900.

However, a report by the parliamentary commissioner for standards, John Lyon, found MacShane controlled the EPI's bank account. MacShane then wrote to Lyon admitting he had submitted false invoices to claim about £7,500 in expenses.

The false invoices relate to work MacShane carried out in Europe, an area for which he previously had ministerial responsibility under Tony Blair's government.

In November the standards and privileges committee recommended MacShane be suspended for an unprecedented 12 months. Kevin Barron, the committee's Labour chairman, said it was the "gravest case" yet to come before MPs.

On the same day Labour suspended him from the party. MacShane resigned as MP shortly after.

Allegations against MacShane were originally referred to Scotland Yard in October 2010, but police and prosecutors took no action at the time, citing a lack of evidence.

The Conservative MP Philip Davies wrote to the police last year asking them to reopen their inquiry in light of the new evidence. After consultation with the CPS, they have decided to do so.

MacShane, who has repaid the money, said he made no personal gain from the deception, but admitted he had been "foolish" and would take responsibility for his actions by standing down.

In a letter to the Yorkshire Post, he wrote: "Rotherham has been such an important part of my life and I have let this wonderful town, its terrific people and my constituency down so very badly. I accept fully the responsibility for my actions."

The former journalist and newsreader added: "That I was at grievous fault there can be no doubt."

Five MPs, all Labour, have faced charges for expenses fraud, four of whom have been jailed.

David Chaytor, Elliot Morley, Jim Devine and Eris Illsley were sentenced to between 12 and 18 months. Last month Margaret Moran was found unfit to plead to charges of fiddling £53,000 in parliamentary expenses and was given a two-year supervision and treatment order.

MacShane, a former contributor to the Guardian, declined to comment on Monday.