Scotland Yard Commissioner Sir Ian Blair is facing calls for a full inquiry into how a close personal friend was awarded £3 million of police contracts.

Members of the Metropolitan Police Authority are set to question Sir Ian over contracts awarded to Impact Plus, a management consultancy company run by his friend Andrew Miller.

Mr Miller has admitted discussing the contracts while on holiday with Sir Ian, his friend of 30 years.

Today members of the MPA said they were treating any question of an improper relationship extremely seriously and were waiting for Sir Ian to make a full statement when the authoritymeets on Thursday.

It is the latest blow to Sir Ian, who is already involved in a stand-off with Assistant Commissioner Tarique Ghaffur, who claims he has been the victim of racial discrimination.

Lord Harris of Haringey, the chairman of the MPA corporate governance committee, said he would request a probe. He told The Daily Telegraph: "This is potentially extremely serious. I am sure the MPA will want to review all the internal paperwork to satisfy itself on the probity or otherwise of these arrangements."

The question of a potential conflict of interest arose after it was revealed Mr Miller's firm was first given a £150,000 consultancy role in 2002, when Sir Ian was deputy commissioner, as part of an upgrading of the 999 system.

Sir Ian told colleagues he needed someone to act as a "programme conscience". In the next six years further contracts were awarded to Impact Plus. It emerged today that Sir Ian had been warned several times about the potential conflicts of interest by the chairman of the MPA, Len Duvall, and Catherine Crawford, the organisation's chief executive.

Tory member James Cleverly who chairs the MPA's professional standards committee said: "I think we need to quiz him to find out exactly what went on. It may be that he appears before the standards committee, but we need to look at the whole procurement process."

Green party member of the MPA Jenny Jones said: "I'm very surprised that Ian Blair didn't remove himself from the whole thing. We need to find out what went on." Sir Ian has said he did write a letter to the treasurer of the MPA stating he knew Mr Miller.

He said: "The only Impact Plus contract I was associated with as the Senior Responsible Owner of the C3i Programme followed appropriate procurement processes. As part of programme governance a subsequent review in 2005 confirmed this. I was open and straightforward in informing both the MPS and MPA about my friendship with Andy Miller prior to any contract being awarded.

"I strongly reject any suggestion that I have behaved inappropriately in any way and consider I have acted with absolute probity."

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