Tory chairman Baroness Warsi has been cleared of abusing expenses by claiming for overnight stays at a property she was using for free.
But the Cabinet minister was found to have breached rules by failing to declare that she was renting out her own London home.
The peer faced criticism from Labour for allegedly pre-empting a report by house of Lords standards commissioner Paul Kernaghan after saying he had “dismissed” the allegations against her.
Mr Kernaghan has been looking into accusations that Lady Warsi claimed up to £2,000 while staying rent-free at a property belonging to Conservative donor Dr Wafik Moustafa.
She insisted she had made a “financial contribution” to her aide, Naweed Khan, who lived at the house during 2008.
In a statement this morning, the peer said she was “delighted” to draw a line under the matter, while David Cameron said it cleared the way for her to lead the Conservatives’ campaign for the election of police and crime commissioners.
”I have always maintained that the allegations surrounding my expenses were untrue and I am delighted that Paul Kernaghan has dismissed them,” Lady Warsi said.
”His report and the report by Sir Alex Allan - two independent inquiries - have now drawn a line under these matters and my only focus now will be to get on with my job.”
The Prime Minister added: “I am pleased that these allegations have been dismissed by the Lords Commissioner.
”With elections for police and crime commissioners in the autumn, this will be a big summer of campaigning for the Conservative Party. As co-chairman, Sayeeda (Warsi) will be leading that campaign.”
The announcement was made after Mr Kernaghan wrote to Lady Warsi notifying her of his conclusions.
However, his report has not been published or endorsed by the Lords committee that considers conduct matters.
And hours after Lady Warsi’s statement the House authorities clarified that she had in fact been found in breach of rules.
A Lords spokeswoman said: “The Commissioner for Standards has written to Baroness Warsi advising her that he would be submitting a report on her case to the Sub-Committee on Lords’ Conduct in early August.
”He stated that he had dismissed the allegation that she had wrongly claimed expenses for overnight accommodation costs in London.
”He did, however, find that she had breached the Code in relation to her failure to properly register a property in the Register of Lords’ Interests.
”He acknowledged that she had already written to the chairman of the Sub-Committee recognising that failure and apologising for it.
”He would be recommending that that apology, along with her corrected entry in the Register, constituted appropriate remedial action and that no further action was required.”
It is understood that Lady Warsi had not declared rental income from her London property in the register of interests.
A senior Labour source said: “It seems she is a long way from having been cleared by this report.”
The sub-committee is not due to consider and publish Mr Kernaghan’s findings until October - by which time Mr Cameron is widely expected to have carried out a ministerial reshuffle.
The Prime Minister’s reference to a “big summer of campaigning” appeared to stop short of guaranteeing she would still be in her post by the autumn.
Mr Cameron’s adviser on ministerial interests, Sir Alex Allan, conducted an investigation last month into separate allegations against Lady Warsi, and found that she was guilty of only a “minor” breach of the ministerial code in relation to a trip to Pakistan with a business partner in July 2010.
Sir Alex said then that the Cabinet Office minister accepted that she should have informed officials of her relationship with Abid Hussain - a second cousin of her husband - and had already issued an apology.