The Mayor came under fire today for spending £50,000 investigating allegations of financial irregularities at City Hall after initially saying the inquiry would cost nothing.

Boris Johnson set up the forensic audit panel immediately after coming into power to investigate evidence uncovered by the Evening Standard of irregularities and mismanagement in London Development Agency spending.

Led by former newspaper editor Patience Wheatcroft, the panel has already produced an interim report which concluded that "due diligence" had not been used at all times. All members of the panel gave their time for free, but today Mr Johnson said further work by PricewaterhouseCoopers and the drawing up of new procedures for the LDA would cost £50,000.

At Mayor's Question Time today opposition members of the London Assembly accused him of "misleading" Londoners and said the Tories would be " screeching from the rooftops" if the previous mayor had made such a decision.

Leader of the Liberal Democrats Mike Tuffrey said: "What was revealed was that £50,000 was being spent even though a week ago you promised that there was no money going.

"Is this not behaviour that we would not have tolerated at the fag-end of an eight-year administration and we're not even into eight weeks of your administration. What is going on?"

Mr Johnson refused to apologise and said the costs were necessary and worthwhile. He said: "I do think that it's worth spending a small amount so that we get a definitive account of what has been going on to make sure that the many millions of pounds poorly accounted and quite probably wasted or worse that we've seen over the last few years are never lost again and I think it's a worthwhile expenditure."

A spokesman for the Mayor said even though taxpayers' money was being spent on the investigation it was at a cut price and Londoners were getting excellent value for money.

He said that all members of the panel who produced the interim report had worked for nothing including Andrew Gordon, the head of forensic investigations at PWC, whose fee would otherwise have been £300,000 to £400,000.

Having produced the report Mr Gordon-had suggested setting up procedures to ensure complete transparency and accountability in future.

This would involve six staff who would normally be paid £300 per hour each, but a deal has ensured a £50,000 limit to produce a report and new guidelines.

Five projects funded by the LDA are being investigated by police. All of them - the Caribbean Showcase, Diversity International, Brixton Base, Green badge taxi school and Ethnic Mutual - have links with Lee Jasper, the former race and policy adviser to Mr Livingstone. Mr Jasper, who resigned in March, has denied any impropriety.

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