Police could be called in to investigate how companies operated by Jennifer Arcuri came to be awarded £100,000 of public money during a time when she was close friends with Boris Johnson, deputy Labour leader Tom Watson has suggested.

Ms Arcuri’s relationship with the prime minister has sparked a major row around alleged conflict of interest after details emerged of a lucrative government sponsorship deal and numerous foreign trips alongside Mr Johnson at the taxpayers’ expense.

Mr Watson said the revelations highlighted a “deeply worrying pattern of behaviour”, and that the circumstances of state funding for one of Ms Arcuri’s companies “may well become a matter for the police”.

It has also emerged Ms Arcuri’s company hosted a 2012 event during Mr Johnson’s stint as mayor of London, at which Mr Johnson and far-right figurehead Milo Yiannopoulos were the headline speakers.

Mr Watson said the decision to award funding to a company that had provided a platform for a figure such as Mr Yiannopoulos was “deeply troubling”.

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The event was held shortly after Ms Arcuri first met Mr Johnson, and aimed “to provide a platform to connect investors, tech entrepreneurs and game-changing technologies in order to help develop tech startups throughout the country”, according to its website.

The same year, Ms Arcuri founded another company, listed as Title X Technology Ltd, with a city trader named Tom Hayes, who later that year was convicted and sentenced to 14 years in prison for his role in the Libor-rigging scandal. Records on Companies House show Ms Arcuri and Hayes were the only directors of the now defunct firm.

A report by the Sunday Times also revealed the string of foreign trips Ms Arcuri attended along with Mr Johnson in the following years.

This week, questions have been raised over the validity of a £100,000 grant awarded to another of her companies, Hacker House, by the Department for Digital, Culture, Media and Sport, in January this year. Companies were only eligible if they were UK-based.

But it has emerged Hacker House’s registered address was a flat in Macclesfield that Ms Arcuri and her partner had moved out of – to live in the US – apparently before the application for the grant was made.

Furthermore, the grant exceeded 50 per cent of the company’s income, which also reportedly made it ineligible for the scheme.

In the House of Commons on Tuesday, digital minister Matt Warman insisted there was “no reason to think there is anything untoward” about the grant, and said the firm “is a company with a British phone number”.

After the exchange, the registered address of the company was mysteriously changed – from the flat in Macclesfield to a co-working space in Fleet Street, London.

Repeated calls by The Independent to the British phone number listed on Hacker House’s website reached an answer machine with an American-accented message.

The government has paused payments to Ms Arcuri’s company while it investigates the grant, and now faces embarrassing questions about the verification process it undertook in approving the award.

Speaking to The Independent, deputy Labour leader and shadow secretary for digital, culture, media and sport, Tom Watson, suggested the circumstances of how the grant was awarded could become a criminal matter.

He said: “Some of their actions, like changing the registered business address just in the last few days, certainly set more alarm bells ringing, and it seems the company directors may not have lived in the UK for some time.

“The question is: are they really a UK-based company? If the answer is no, as I suspect it might be, then this may well become a matter for the police.”

Mr Watson also said the repeated awarding of funds to a company that had provided a platform for Mr Yiannopoulos was also concerning.

He said: “It is very troubling that Boris Johnson chose to appear at an event with a far-right figure like Milo Yiannopoulos, and that an organisation that gave Yiannopolous a platform received public money.

“I understand that City Hall are currently investigating Johnson’s connections to Arcuri during his time as mayor, and the prime minister should comply fully with that work. It is high time that Boris Johnson learned he cannot just shirk his responsibilities.”

Mr Johnson is now under increasing pressure to explain his friendship with Ms Arcuri, the repeated foreign trade missions they both attended, and City Hall’s decision to award thousands of pounds to her company InnoTech in advertising.

The prime minister has said he will comply with a London Assembly order to explain his links to Ms Arcuri – but said his former colleagues were “barking up the wrong tree”.

Mr Watson added: “It is a deeply worrying pattern of behaviour that speaks to the fundamental question of Boris Johnson’s character. Can he be trusted with public money? Can he be trusted to behave in a way expected of those in the highest office?

“There are still questions that need answering, but the broader truth is clear: Boris Johnson is not fit for office.”

Mr Watson’s office said he was writing to Nicky Morgan, the secretary of state for digital, culture, media and sport, asking her to publish all documents relating to the grant application, but also to carry out an audit into how the funds allocated by the government have been spent so far.

The terms of the grant stipulate that companies in receipt of funding may be subjected to random audits.

A DCMS spokesperson told The Independent: “Funding for this scheme was awarded through open and fair competition. We regularly monitor grant initiatives and treat any allegations of impropriety with the utmost seriousness.”