Image caption Lady Warsi says she made appropriate payments for staying at the property

The co-chair of the Conservative Party, Baroness Warsi, has become involved in a dispute over whether she paid rent while staying at a house in London, for which she claimed expenses.

Lady Warsi has also admitted failing to declare rental income from a flat she owns in north-west London in the House of Lords register of interests.

The baroness said she took full responsibility for that "oversight".

Labour MPs have called on the Lords' standards commissioner to investigate.

Shadow business secretary Chuka Umunna told the BBC's Sunday Politics there had to be a "proper independent investigation".

"I don't think this is anything any politician from any political party can crow about. When you see these types of stories being reported, it is bad for politics generally."

Lady Warsi claimed accommodation expenses from the taxpayer while she was staying with a friend, at a house he rented in Acton, west London.

But according to reports in the Sunday Times and the Sunday Telegraph , the owner of the property denies that he received any income from her.

It is reported that Lady Warsi was claiming £165.50 a night subsistence allowance.

In a statement last night, the baroness said she bought a flat in Wembley in September 2007 but it was not due to be ready until the following year.

While it was being finished she stayed predominantly at two hotels, but also for "occasional nights" in Acton with Tory party official Naweed Khan, who later became her special adviser.

She says she stayed there for about two nights a week over a six-week period at the start of 2008.

It all seems very murky. We need a full investigation into the matter John Mann, Labour MP

"For the nights that I stayed as a guest of Naweed Khan, I made an appropriate financial payment equivalent to what I was paying at the time in hotel costs."

Mr Khan confirmed that she had paid him an unspecified amount for the nights she stayed there.

"In the early part of 2008, for a short period, Baroness Warsi stayed with me," he said in a statement.

"I confirm she made a financial payment on each occasion, which compensated for the inconvenience caused and additional costs incurred by me as a result of her being there."

But it's not clear if the money went to the owner of the house, Dr Wafik Moustafa.

Media playback is unsupported on your device Media caption Dr Wafik Moustafa, who owns the west London house, say rent was not discussed

The GP has campaigned and raised funds for the Conservative Party for many years, but according to the Sunday Telegraph, he recently fell out with the baroness.

He told the Sunday Times she didn't pay rent, utility bills or a council tax contribution and had her own bedroom and front door key.

Dr Moustafa said she usually stayed there from Monday to Thursday and occasionally at weekends.

Labour MP John Mann said he would be asking the Lords Commissioner for Standards to investigate, adding: "It all seems very murky."

The issue is far less clear cut than some of the expenses claims that first emerged in 2008 but there appears to be gaps in the versions of what went on, says BBC political correspondent Robin Brant.

The rules for expenses claims by members of the House of Lords, as set out on the Parliament website for the year 2007-08 , say members living outside of London can claim a maximum of £165.50 a night for overnight accommodation in the capital.

It does not say if that figure may include additional expenses such as meals. Nor does it say whether receipts are required, although the amount of expenses MPs could claim without a receipt was cut from £250 to £25 in April 2008.

Rental income

In a separate development, Lady Warsi, whose main home is in Dewsbury, West Yorkshire, admitted not fully declaring rental income from the Wembley flat after she moved out in June 2010.

Party sources have not revealed the full amount Lady Warsi earned from renting her property, but they say it is over the £5,000 annual limit before full disclosure is required.

The baroness had declared the property on the register of ministerial interests but she failed to inform the register of Lords' interests that she was letting the property.

Baroness Warsi added: "When the discrepancy became apparent this week, I immediately informed the registrar of Lords' interests of its omission.

"At all times my ownership of the flat and the fact that it was being let out was fully disclosed to Cabinet Office officials and HM Revenue and Customs, and was appropriately reported on the register of ministers' interests held by the government."

Conservative party sources have described the incident as a "cock up" which has been remedied, and said that Lords authorities will not take further action.