Peter Hain is to face an official inquiry into 103,000 pounds of undeclared political donations, parliament's sleaze watchdog confirmed on Monday.
The office of the Parliamentary Commissioner for Standards said an investigation was now under way after a complaint was received about the Work and Pensions Secretary's conduct from a backbench Conservative MP last week.
The inquiry will be held in secret and could take many months before being submitted to the Commons Committee on Standards and Privileges.
Prime Minister Gordon Brown said he was standing by Hain but that his fate ultimately lay with the investigating authorities.
"Peter has done a great job and it would be a great loss if he had to leave the government," Brown told The Sun.
"He took his eye off the ball and has apologised," he added. "It would be my expectation that he will carry on in government."
Hain said at the weekend there had been no attempt to cover up the donations and he would not resign.
"The notion that there was some attempt by me to hide anything is absurd," said Hain, who used the money - plus 82,000 pounds that he did declare - to finance an unsuccessful bid last year to become deputy leader of the Labour party.
