The row over Tory donor Michael Ashcroft's tax status has prompted Labour's longstanding party donor Swraj Paul to announce his decision to end his 'non-dom' status.
In an interview with the New Statesman, Lord Paul of Marylebone said he planned to begin paying income tax on all his earnings from the start of the next financial year.
The move follows legislation from the government making it clear that all lawmakers must be fully resident in the UK for tax purposes.
"On the issue of taxation position of peers, of course it goes without saying that I'll be fully complying with the change of law which the government is bringing forward," he said.
"I strongly support the government proposals in relation to the taxation status of peers and MPs and the membership of the House of Lords and the House of Commons."
Lord Paul had been pointed to by Tories responding to the media storm surrounding Lord Ashcroft's revelation last week confirming his non-dom status.
Yesterday David Cameron insisted he had "sorted out" the Conservative party's funding issues, despite Lord Ashcroft's 2000 undertaking to then-Tory leader William Hague that he would become a British resident for tax purposes.
Lord Ashcroft explained that he and the government had subsequently interpreted that undertaking to mean a "long-term resident" of the UK, triggering a storm of criticism from Labour ministers.
"The fact is some time before the election he has answered the questions about where he pays his tax," Mr Cameron told the BBC.
"He's answered the questions about donations. It has been done before the election and it was done by me."
Mr Cameron said the Tory party was in debt "to the tune of over £20 million" when he took over as leader in 2005.
Now, he said, the debt had been reduced to "single figures" as he claimed that he had reduced its reliance on major donors.
Lord Ashcroft said he agreed with Mr Cameron's decision to prevent anyone in the legislature not being a British resident for tax purposes.
"Anyone in my government would be treated as a full UK taxpayer," Mr Cameron added.
"I was the first to move on that, the government has now taken on my suggestion."
As a non-domicile, Lord Ashcroft currently only pays income tax on money earned from his British business interests.
Most of his money is reportedly earned in Belize, where he spends much of his time.