The elections watchdog is looking into whether Conservative Party donations were used to fund part of the renovation of Boris Johnson’s Downing Street flat.
The Electoral Commission said it is trying to figure out whether any of the funds relating to the renovation should have been declared under the law on party political donations.
Responding to its disclosure, the Conservative Party said all reportable donations were correctly declared in compliance with the law.
The investigation follows reports by the Daily Mail that about £60,000 of party funds were used to cover the reported £200,000 cost of doing up the official four-bedroom flat above 11 Downing Street that Mr Johnson lives in with his fiancee, Carrie Symonds, and their baby, Wilfred.
A commission spokeswoman said: "We are in contact with the party to establish whether any sums relating to the renovation works fall within the regime regulated by the commission.
"If so, they would need to be reported according to the rules specified in law, and would then be published by the commission as part of our commitment to the transparency of political finance."
Sources from the Conseratives said, like all parties, they are in regular discussions with the commission.
A party spokesman said: "All reportable donations to the Conservative Party are correctly declared to the Electoral Commission, published by them and comply fully with the law.
"Gifts and benefits received in a ministerial capacity are, and will continue to be, declared in government transparency returns."
Earlier in March, Mr Johnson’s press secretary Allegra Stratton said Conservative Party funds were "not being used to pay for any refurbishment of the Downing Street estate".
However, the accusations have not stopped.
Labour’s deputy leader Angela Rayner said Mr Johnson "cannot keep on dodging questions" about the refurb.
"The British people have a right to know how much money has been spent and where that money came from," she said on Saturday.
"Given the government’s track record of handing out contracts to Conservative Party donors and cronies, if the money to pay for this work has indeed come from donors then the public will rightly be demanding answers over what access and special favours these donors may well be expecting in return."