Banbury MP Tony Baldry said last night he was confident he would be cleared of allegations that he used his position as chairman of a major Commons committee to further his own financial interest in a West African diamond firm.

Mr Baldry, chairman of the Commons International Development Committee, has close links with Sierra Leone, a war-ravaged African country heavily dependent on British Aid.

According to The Sunday Times, Mr Baldry has used his influence to lobby the British Government on behalf of diamond firm Milestone Trading, resulting in payment made to Red Eagle Resources plc, of which the MP is a shareholder.

But Mr Baldry denied abusing his position as committee chairman and told the Oxford Mail that he expected to be exonerated by any subsequent parliamentary investigation.

Labour MP George Foulkes, a former international development minister, said he would be reporting the Tory MP's activities to Sir Philip Mawer, the parliamentary commissioner for standards.

Mr Foulkes said: "This commercial activity is incompatible with his role as committee chairman, particularly now that select committee chairman are paid.

"They should be scrupulous they are not using their position for financial gain."

Mr Baldry admitted his links to the two companies and said they were bringing much-needed jobs and investment to one of the poorest countries in the world.

But he denied abusing his position and added: "Once Foulkes has written to the parliamentary commissioner for standards claiming I have breached the rules, he will write to me and I will provide a full and complete response to all and any allegations and will not be found to have done anything untoward.

"Red Eagle and Milestone have been working together - that is correct. But I have not been lobbying on behalf of Milestone, I have not asked for any endorsement by the Government on behalf of Milestone's activities and I have not used my position as chairman of the select committee for personal benefit.

"I am totally confident that I will be found to have done nothing which will cause anyone concern."

The select committee the MP chairs is responsible for scrutinising millions of pounds worth of Government aid spent in countries like Sierra Leone.

A critical report by the committee can have an impact on whether such aid continues.

Mr Baldry, a barrister, has been MP for Banbury since 1983 and was a foreign office minister in John Major's government.

In 2000, he revealed he was a Freemason and a director of 12 companies.