Tory grandee Sir Malcolm Rifkind has been suspended from his party after being caught up in a new "cash for access" scandal.

The Conservative Party announced it is to investigate the claims that the former foreign secretary was recorded offering influence for money.

David Cameron said the situation was "very serious" and stressed it was "right" for Rifkind to refer himself to the parliamentary commissioner for standards.

"In Sir Malcolm's case, he is still a candidate at the general election so there will be an immediate disciplinary inquiry by the Conservative Party to look at this case," the prime minister said.

"But most important of all, I want people to know in our country that our MPs are there to serve their constituents and to serve their country – that's the purpose of sitting in parliament.

"We do have tough rules and it's important that those tough rules are properly policed."

Rifkind was said to have claimed he could arrange "useful access" to British ambassadors and also said he was "self-employed" despite MPs earning at least £67,000 a year.

"I am self-employed – so nobody pays me a salary. I have to earn my income," he told reporters from the Daily Telegraph and Channel 4's Dispatches.

'Unfounded' allegations

Rifkind, the chair of the Intelligence and Security Committee, has claimed the allegations were "unfounded" and he would "fight" against them.

"The basic allegation is there is something improper about a member of parliament being willing to take part in, in this case in an advisory board, in a company that is seeking to invest in the UK," the 68-year-old said.

"But of course there are probably 200 MPs who have various business interests other than their MPs salary.

"Some people disapprove of that and maybe the Labour party disapproves of that."

Jack Straw was also caught in the undercover sting and has suspended himself from Labour's parliamentary party.

The Blackburn MP, who is to retire at the general election, was heard saying he usually charges "£5,000 a day" for a speech.

The former foreign secretary also boasted he operated "under the radar" to influence a change in European Union (EU) rules after a commodity firm paid him £60,000 a year.

But Straw stressed he was talking with the reporters, who posed as executives from a Chinese firm, about work he might do after standing down as an MP and denied any wrongdoing.