A NUMBER of politicians are thought to have been caught up in an alleged "cash for lobbying" scandal that has already seen a senior Conservative resign his party's whip.

Former Tory frontbencher Patrick Mercer yesterday denied he had breached any rules but said he was standing down to save the party embarrassment.

He has also referred himself to the parliamentary standards watchdog.

In allegations that will evoke memories of the "cash for questions" scandal, Mr Mercer is thought to have been approached by journalists posing as a fake company keen to lobby on behalf of Fijian business interests for the country to be readmitted to the Commonwealth.

In a statement, Mr Mercer said he agreed only to undertake consultancy work outside Parliament.

But it emerged he had asked five parliamentary questions and signed an Early Day Motion – a traditional way for MPs to draw attention to an issue – on Fiji.

Last night sources suggested Mr Mercer was only the "first" in a series of sting operations which had targeted a number of high-profile politicians.

Before he entered Parliament in 2001, the MP spent 25 years in the Army, completing nine tours of Northern Ireland.

He initially had a stellar career but was demoted to his party's backbenches in 2007 amid outrage over remarks he made which were seen as racist.

In an interview he had said that he had come "across a lot of ethnic minority soldiers who were idle and useless but who used racism as cover for their misdemeanours".

In recent years he has been seen as a thorn in the side of David Cameron.

In 2011, he was forced to deny calling the Tory leader an "arse" and saying that the Prime Minister was the " worst politician in British history since William Gladstone".

Such is the animosity between the two men that when news initially broke that he was to resign the whip it led to intense speculation he could join the UK Independence Party (Ukip).

Last night aides to Mr Cameron welcomed Mr Mercer's announcement, saying the Prime Minister thought he had "done the right thing".

But Downing Street will be glad the MP's decision to retain his seat means it has avoided a by-election in his Newark constituency. Although the MP has a majority of 16,000, it is thought the seat could be vulnerable to a Ukip challenge in a snap vote.

The new allegations risk damaging further the reputation of Westminster politics, still reeling from the 2009 expenses scandal.

They have also triggered renewed calls for a register of lobbyists, a key pledge in the Coalition Agreement. Before he came to power, Mr Cameron warned that lobbying was the "next big scandal waiting to happen". But LibDem leader Nick Clegg made clear last week that the Tories were standing in the way of progress on a statutory register.

A number of his fellow MPs have also reiterated calls for a right of recall to allow voters to get rid of disgraced politicians.

At the moment, MPs can only be voted out by the electorate at a general election.

Matthew Sinclair, chief executive of the TaxPayers' Alliance, said Mr Mercer's constituents would be "intrigued as to why their MP has resigned from his party but not from Parliament".

Mr Mercer's local party said the MP himself has had made the decision to resign the whip. It said Mr Mercer would remain in the Commons as an independent, adding: "Until such time as there has been a full and proper investigation, in line with British justice, we shall neither pre-judge nor pre-empt the outcome.

The sting was a joint operation between BBC's Panorama programme and The Daily Telegraph.

The Panorama programme is now expected to air next week.

The "cash for questions" affair broke in 1994 when two Conservative MPs were accused of placing Parliamentary questions in return for payment.