Labour MP Ben Chapman said he was "extremely distressed" after an investigation was launched into claims that he was given permission by Commons authorities to claim taxpayer-funded allowances for loan interest he was no longer paying.
The Daily Telegraph said correspondence showed the Wirral South MP sought and was given permission to reclaim the interest payments on the full value of his original mortgage despite paying off £295,000 of the loan in 2002.
He benefited by £15,000 over 10 months from the arrangement, which documents suggested was not unique to him, the newspaper said.
Speaking as he left his home in Lambeth, south London, Mr Chapman said: "I'm obviously extremely distressed. I haven't yet seen the Telegraph, but I've heard about the allegations. This relates to a period before the Freedom of Information period so I haven't seen any of the papers.
"Whatever I've done, I've been entirely open and above board with the authorities and Parliament and I'm distressed that this has occurred. I'm now going in to discuss it with them and see what the situation is. But I don't want to comment further because I haven't seen the papers."
He added: "Everything was done openly and there are presumably records. I'm obviously distressed about it."
The Telegraph, which has obtained the detailed expenses claim files of MPs, said Mr Chapman had told the Fees Office he was paying off the sum on his second home in south London. That move cut his monthly interest payments, which can be claimed back in Additional Costs Allowance (ACA), from £1,900 to £400.
But Mr Chapman told the Fees Office: "By paying off capital I am forgoing interest and investment opportunities elsewhere," the newspaper said. The document said that he and an official "disagreed that the mortgage should remain for ACA purposes at the original amount".
It also published part of an email between officials discussing Mr Chapman's arrangement, which appears to show other MPs were allowed to do the same. Such arrangements were said to have been stopped when it was decided they should not have been allowed but no investigation was held into them, The Telegraph said.
On Sunday night, a Number 10 political spokesman said: "The Chief Whip has spoken to Ben Chapman. He's investigating documents provided by Mr Chapman and will seek further clarification from him and the Fees Office."
