Two peers have been suspended from the Labour Party over claims they offered to carry out parliamentary work in return for cash.

Ex-cabinet minister Lord Cunningham and former senior police officer Lord Mackenzie of Framwellgate were recorded by reporters posing as lobbyists.

In a statement, the party said the pair "have been suspended from the Labour Party pending further investigation".

"The Labour Party expects the highest standards of its representatives and believes they have a duty to be transparent and accountable at all times."

Lord Laird earlier resigned the Ulster Unionist party whip after being targeted by the same investigation.

All three deny breaching the rules and have referred themselves to the House of Lords Commissioner for Standards.

The three peers are alleged to have told reporters posing as lobbyists representing a fake solar energy firm they could help push its agenda – in apparent breach of a ban on paid advocacy.

It comes just two days after MP Patrick Mercer quit the Tory whip, referred himself to the Commons sleaze watchdog and announced he would quit the Commons in 2015 over similar allegations.

It is claimed he tabled parliamentary questions and a motion, offered a security pass and set up a parliamentary group for a lobbying firm paying him £2000 a month to push for the end of Fiji's suspension from the Commonwealth.

They were undercover reporters from the BBC's Panorama show and the Daily Telegraph.

Lord Laird was also targeted by the investigation and is alleged to have offered to get parliamentary questions asked in return for cash.

The latest controversy has reignited calls for the Government to introduce a statutory register of lobbyists and "recall" powers against wrongdoing MPs.

Lord Cunningham said the report of his meeting with the bogus lobbyists was "misleading".

He is alleged to have offered to ask parliamentary questions on behalf of the firm and take concerns directly to the Prime Minister. Recordings appear to show him asking for £12,000 a month rather than the offered £10,000 and telling the bogus lobbyists he offered "value for money" because of his access to senior figures.

Lord Cunningham, who was an MP for 22 years and served in Tony Blair's Cabinet, insisted he had been testing his suspicions that he was being targeted by a scam.

He said: "The Sunday Times story contains a highly sensationalist and misleading account of one meeting with journalists posing as business people.

"I quickly became suspicious of them and the money they were offering and sought to test my suspicions during the meeting.

"What the article does not make at all clear is that I told the undercover journalists that I always stick to the rules.

"That same day I notified Baroness Royall, the Labour Leader in the House of Lords and Lord Bassam, the Chief Whip, of my suspicions and what had occurred. I also reported to the Clerk of the Parliaments and the Registrar of Members Interests.

"In addition I have referred the matter to the Lords Commissioner for Standards. Unfortunately, this is something that I will need to discuss with my lawyers."

The Sunday Times said the peers had made it clear to the reporters they would have to declare any money they were paid.

Lord Laird said he had "not broken any rules". "I did not agree to act as a paid advocate in any proceedings of the House nor did I accept payment or other incentive or reward in return for providing parliamentary advice or services," he said. "I have not broken any rules. However, I have referred the situation to the appropriate authorities."

Ulster Unionist leader Mike Nesbitt said he had spoken to the peer after reviewing footage and media reporting of the two stings, leading to him relinquishing the party whip pending the review. "The Ulster Unionist Party expects and demands high standards of our elected representatives," he said in a statement.

Lord Mackenzie also denied any wrongdoing. The Sunday Times reported that he explained he had "devised a ruse" that allowed him to host events for paying clients, by asking colleagues to hold them.

The paper also alleged he was happy to ask questions and approach ministers in the Lords to "bend their ear".

Lord Mackenzie said he was "convinced I will be vindicated" by an investigation. He conceded that "morally it may well look as though it's not right" but defended his comments about switching event hosts.

"It's a very complex area, but I made sure I knew the rules before I went into any of this."

Cabinet Office Minister Francis Maude expressed confidence that lobbying reform would proceed before the election as Labour demanded urgent cross-party talks on the stalled introduction of a register.

David Cameron warned in 2010 that lobbying was the "next big scandal waiting to happen" but there has been no legislation.

A Labour Party spokesman said: "Where there is genuine evidence of wrong doing, including non-compliance with the Code of Conduct, the Labour Party will consider appropriate disciplinary action as and when necessary."