'Lodger' Smith in home expenses row

Ms Smith said she had "fully abided" by the rules by designating her sister's house as her "main" residence, allowing her to claim payments on the Redditch constituency home she shares with her husband and children.

But campaigners said her claim - which the Mail on Sunday said totalled more than £116,000 over several years - was "morally questionable" and accused her of failing to set an example following recent scandals.

The tax-free Additional Costs Allowance, worth up to £24,006 a year at present - is claimed by MPs for the costs, such as mortgage interest and fuel bills, of working in both Westminster and a constituency.

Under the rules, the main residence is where the MP "spends more nights than any other" although recent guidance said "value for money" for the taxpayer could be used as a factor if there was doubt which home that was.

A spokeswoman for Ms Smith said: "The Home Secretary has long-standing written approval from the Parliamentary Fees office for any agreed expenses. She spends the majority of her time in London attending to Government business and has full approval for any associated expenses relating to her second home in her West Midlands constituency."

The spokeswoman said the Home Secretary "makes a contribution to the household" but did not give details of rent or other arrangements.

Asked by the newspaper why Ms Smith did not use a "grace and favour" official ministerial residence in the capital, she said: "She has lived with her sister in London since she was a backbench MP and is perfectly happy with it. Most people would think that is a nice thing."

The Taxpayers' Alliance criticised the arrangement. Its chief executive Matthew Elliott said: "Many people looking at this situation will consider it morally questionable that Jacqui Smith should have claimed this allowance."

Liberal Democrat MP Norman Baker told the newspaper it "seems extraordinarily bad value for the taxpayer".