Accusations of a large-scale Labour cover-up over Paul Flowers’ actions at Bradford Council reached the House of Commons, as the scandal over the Methodist minister entered its fourth day.

Prime Minister David Cameron announced that the Government wanted an inquiry into Mr Flowers’ appointment at the troubled bank.

And a Prime Minister’s Questions, he said: “What we can now see is that this bank, driven into the wall by this chairman, has been giving soft loans to the Labour Party, facilities to the Labour Party, donations to the Labour Party, trooped in and out of Downing Street under Labour, still advising the leader of the Labour Party.”

Tory chairman Grant Shapps has demanded to know whether Labour leader Ed Miliband and Shadow Chancellor Ed Balls were aware of the real reason behind Mr Flowers’ resignation in Bradford.

He said: “So far people asking honest questions of the Labour Party have been met with a wall of silence. In the interests of your own credibility to govern, it is time to come clean.”

But the Labour Party, which has suspended the 63-year-old from the party for bringing it into disrepute, has insisted neither Mr Miliband nor Mr Balls had been told why Mr Flowers had resigned.

A Labour Party spokesman said Mr Miliband and Mr Balls were shocked at the recent revelations.