Labour has written to Theresa May demanding she sack Chris Grayling following accusations that he misled parliament over a botched government ferry contract.

The transport secretary is facing mounting pressure after telling MPs that "no money" had been spent on the controversial multi-million pound contract with Seaborne Freight - only for it to emerge that his department paid external consultants £800,000 to evaluate the deal and two others.

Opposition parties have called on the beleaguered transport secretary to resign over the fiasco, with Labour accusing him of deliberately misleading MPs.

The decision to award the £13.8m contract to Seaborne for freight ferry services in the event of a no-deal Brexit was widely criticised last month after it emerged that the firm did not own any ferries. The farce deepened when it was found that the company appeared to have copied the terms and conditions on its website from a takeaway restaurant.

Mr Grayling was forced to scrap the deal last week after Seaborne's apparent main backer, Irish firm Arklow Shipping, withdrew its support.

Defending the decision in the Commons on Monday, the transport secretary told MPs: "We have spent no money on this contract."

He had previously insisted that no money would be spent unless the ferries began operating,

However, a memo produced by the National Audit Office (NAO) found that the Department for Transport had paid £800,000 to consultants Slaughter and May, Deloitte and Mott MacDonald to scrutinise the three ferry deals.

Shadow transport secretary Andy McDonald raised the issue in a Commons point of order on Tuesday and suggested Mr Grayling had breached the ministerial code by misleading MPs.

In a follow-up letter to Ms May, he said the transport secretary had "repeatedly defended the decision to award the contract by claiming there would be no cost to the taxpayer as the company would not receive payment were they unable to provide services."

He wrote: "In answer to my Urgent Question on 8 January, the secretary of state claimed, 'We are not spending money unless these ferries operate'. This is plainly untrue as there are several costs associated with the awarding of this contract. Yesterday, the National Audit Office found that £800,000 had been spent on external consultants to assess the bid.

"The secretary of state for transport has misled parliament. At this stage in Brexit preparations and regarding an issue of such national significance, the transport secretary’s misleading of parliament damages our country’s reputation and corrodes trust in politics."

Grayling's biggest failings Show all 8 1 /8 Grayling's biggest failings Grayling's biggest failings Banning books for prisoners Then Justice Secretary Grayling introduced a ban on sending books to prisoners in November 2013. The ban was later deemed unlawful by the High Court PA Grayling's biggest failings Knocking a cyclist off their bike Transport Secretary Chris Grayling knocked a cyclist off their bike by opening his car door in 2016. The footage was released by the recording cyclist a few months after the incident when Grayling complained about London's cycle lanes Guardian Grayling's biggest failings Train timetables fiasco After an Office for Road and Rail report found that nobody had taken charge during a major change to train timetables that left more than one in ten trains being late or cancelled on Northern and Thameslink, Transport Secretary Grayling insisted he was not to blame PA Grayling's biggest failings Unlawful cuts to legal aid The cuts to legal aid for certain categories of prisoner that Grayling introduced as Justice secretary in 2013 were found to be unlawful by the High Court PA Grayling's biggest failings Private probation reversal Theresa May's government has opted to renationalise the supervision of former prisoners after a part-privatisation program begun by Grayling in 2014 was found to be putting the public at risk PA Grayling's biggest failings Ferry contract for a company with no ferries Grayling handed a £14 contract to Seaborne Freight to deliver goods from Ostend to Ramsgate in the event of a no deal Brexit. The contract fell through after the Irish company that Seaborne was relying on to carry out the shipping pulled out PA Grayling's biggest failings Criminal courts charge In 2015, then Justice Secretary Grayling introduced a policy whereby convicted criminals would have to pay from £150-£1200 towards the cost of their case. The policy was criticised for compelling defendants to plead guilty and led to protests by magistrates. The policy was scrapped by Michael Gove when he became Justice Secretary later that year PA Grayling's biggest failings Cyclists not road users As Transport Secretary, Grayling once failed to recognise cyclists as road users PA

Mr McDonald said that, under the terms of the ministerial code, ministers are obliged to "give accurate and truthful information to parliament" and must correct any errors "at the earliest opportunity". Ministers who knowingly mislead parliament are expected to resign.

Calling on the prime minister to "immediately" investigate the matter, he continued: "The failure of the transport secretary to correct the record and his repeating of the misleading claim suggests that he intentionally provided MPs with false information.

"Regardless of party-political interest or one’s view on Brexit, we should agree that such conduct is not tolerable. In all these circumstances, so as to restore some semblance of credibility to the office of the secretary of state for transport, I ask you the relieve the incumbent of his post."

Chris Grayling defends awarding contract for running ferries in a no deal Brexit to Seaborne Freight, despite it never running a ferry service before

A Department for Transport spokesperson said: “No taxpayer money has been transferred to Seaborne.

“The legal advice in question covered the entire procurement process and was required for all extra freight capacity contracts with the three operators.