The leader of the House of Lords is to look into allegations that four peers discussed taking payments to make amendments to legislation.
According to the Sunday Times newspaper, the peers were prepared to accept payments of around £120,000 in order to push through amendments to bills in the Lords.
Accepting financial rewards in exchange for exercising parliamentary influence contravenes the House of Lords code of conduct and Baroness Royall of Blaisdon, the Labour leader in the Lords, has said she is "deeply concerned" by the claims.
Liberal Democrat home affairs spokesman Chris Huhne has called for a police probe over the incident, citing a 1990s ruling that requires a police investigation of all allegations of misconduct in the Lords.
The newspaper's undercover reporters posed as lobbyists working for a foreign businessman who wanted an amendment to the Business Rates Supplements Bill.
Former energy minister Lord Truscott admitted to "discussions" with one of the reporters but adamantly told the BBC that ""to suggest I would offer to put down amendments for money is a lie".
Lord Taylor of Blackburn told the Press Association he was approached by two purported lobbyists offering him a monthly fee of between £5,000 and £10,000 to work "behind the scenes" on amendments to the bill.
"It was their suggestion, not my suggestion," he stressed. "I never said I would accept it."
And former defence minister Lord Moonie said that while he did discuss a £30,000 fee with the reporters, "nobody in their right mind would offer direct help in making an amendment".
The paper also contacted former Labour whip Lord Snape, who reportedly indicated we would accept a fee of £24,000 for his help.
Lady Royall commented: "High standards of ethics and probity are central to the work and members of the House of Lords.
"The House has a high reputation and I expect members to abide by its high standards.
"The House of Lords has a code of conduct for members which clearly states that members 'must never accept any financial inducement as an incentive or reward for exercising parliamentary influence'.
"If allegations are made that members are in breach of these rules, and complaints are made about members conduct, then their conduct will be investigated in accordance with procedures laid down by the House."