Baroness Michelle Mone has insisted ministers knew about her involvement with a PPE firm "from the very beginning", as she faced calls to step back permanently from the House of Lords.
The peer dug in to the row by hitting out at Rishi Sunak after he said he was taking the issue "incredibly seriously".
Sir Keir Starmer said she should be expelled from the Lords as he urged the Government to "come clean" about the scandal he described as a "shocking disgrace".
The Labour leader piled pressure on ministers to answer "serious questions" about what they knew, including who started the conversations with Lady Mone in the first place.
A Government minister said on Monday that she should not return to the Lords after admitting lying over a PPE contract.
Energy minister Lord Callanan told Sky News he could not comment on the details of the case given the ongoing criminal and legal actions about it.
After Baroness Mone appeared on Sunday with Laura Kuenssberg, he added: “I watched the interview yesterday. I think she should have declared her involvement in that (a PPE firm) in the House of Lords register.
“There is guidance available for that.”
Pressed further whether given she had admitted lying to the press should she be allowed to make the laws of the land, he added: “I would hope that she would not be coming back to the House of Lords."
Sir Keir Starmer said that the scandal was a "shocking disgrace from top to bottom".
Asked if Baroness Mone should be expelled from the Lords, the Labour leader said: "I don't think she should be in the Lords. I think the government should be held to account for this."
Prime Minister Rishi Sunak on Monday said: "The Government takes these things incredibly seriously, which is why we’re pursuing legal action against the company concerned in these matters.
“That’s how seriously I take it and the Government takes it.
“But it is also subject to an ongoing criminal investigation. And because of that, there’s not much further that I can add.”
What is @RishiSunak talking about?
— Lady Michelle Mone (@MichelleMone) December 18, 2023
I was honest with the Cabinet Office, the Government and the NHS in my dealings with them.
They all knew about my involvement from the very beginning. https://t.co/GOtB2QN7Uu
Baroness Mone, though, hit out at the Prime Minister after he said he is taking the scandal surrounding her involvement with a PPE firm "incredibly seriously".
She tweeted: "What is @RishiSunak talking about?
"I was honest with the Cabinet Office, the Government and the NHS in my dealings with them.
"They all knew about my involvement from the very beginning."
Tory peer Baroness Mone took leave of absence from the Lords as she seeks to clear her name in the controversy.
Michael Gove is facing calls to appear before MPs to answer questions over PPE firm Medpro after Baroness Michelle Mone admitted she stands to benefit from a deal between the Government and the firm.
The Cabinet minister, who was chancellor of the Duchy of Lancaster when the pandemic struck, was name-checked by Lady Mone in her first major broadcast interview since the scandal emerged.
The interview, on the BBC’s Sunday With Laura Kuenssberg programme, saw Lady Mone admit she did not tell the truth about her links to the PPE (personal protective equipment) firm - while insisting that she and her husband have “no case to answer”.
The company is currently being investigated by the National Crime Agency (NCA), while the Department of Health and Social Care (DHSC) has since issued breach of contract proceedings over a 2020 deal on the supply of gowns.
Lady Mone, who was appointed to the Lords by David Cameron in 2015, said she contacted Mr Gove at the start of the pandemic following a “call to arms for all lords, baronesses, MPs, senior civil servants, to help, because they needed massive quantities of PPE”.
“I just said, ‘We can help, and we want to help.’ And he was like, ‘Oh my goodness, this is amazing’,” she added.
Shadow Cabinet Office minister Nick Thomas-Symonds has now called on Mr Gove to answer questions following her claim.
In a letter to Mr Gove, he said: “This series of events has led to civil litigation and a National Crime Agency investigation. Yet these ongoing matters should not preclude you from addressing questions about your own involvement and the role of the Government.
“Events so far expose a shocking recklessness by the Conservative government with regard to public money, and a sorry tale of incompetence in relation to the so-called ‘VIP Lane’ for procurement during the pandemic.”
Mr Thomas-Symonds said that Mr Gove should answer questions about the so-called “call to arms” and what further communications he had with Lady Mone.
“The very least Conservative ministers owe is maximum possible transparency and there should be an urgent statement to Parliament before the Christmas Recess,” he said.
In the interview, Lady Mone insisted that lying to the media is “not a crime”.
She admitted she stands to benefit from a deal between the Government and the firm, which was awarded contracts worth more than £200 million to supply personal protective equipment after she recommended it to ministers.
She also conceded she made an “error” in publicly denying her links to the firm.
She admitted she is a beneficiary of her husband Doug Barrowman’s financial trusts, which hold around £60 million of profit from the deal, but said the couple have been made “scapegoats” for the Government’s wider failings over PPE.
Lady Mone has repeatedly denied that she profited from the deal.
She told the programme “If one day, if, God forbid, my husband passes away before me, then I am a beneficiary, as well as his children and my children, so, yes, of course”.
Lady Mone said she did not mean to fool anyone, despite admitting the couple misled the press about their involvement.
“I did make an error in saying to the press that I wasn’t involved,” she said.
“Hindsight is a wonderful thing. I wasn’t trying to pull the wool over anyone’s eyes, and I regret and I’m sorry for not saying straight out, yes, I am involved.”
Millions of gowns supplied by the company were never used by health services and the Department of Health is still seeking to claw back some of the money.
The couple insist the gowns were supplied in accordance with the contract.
Mr Barrowman alleged that he was asked by a Government official if he would “would pay more money for the NCA investigation to be called off”, claiming he was “gobsmacked”.
Deputy Prime Minister Oliver Dowden, appearing on the same programme, indicated he would be “very surprised” if that was the case.
He said: “There’s a proper process for this to go through, which is in relation to a civil case and a criminal case.”
A Department of Health spokesman said: “We do not comment on ongoing legal cases.”
Mr Dowden also defended the Government’s handling of PPE procurement in the early days of the crisis, insisting there were “no favours or special treatment”.
Lady Mone also recently told a YouTube documentary that they would both be cleared, arguing they have “done nothing wrong”.
The film, part of a public fightback, is believed to have been funded by PPE Medpro.
