Labour peer says he will be paying his taxes

Despite suggestions that he might quit the Upper House rather than become domiciled, the peer said he "strongly supported" the new rules and would "fully comply".

He also said the Metropolitan Police had told him he would not face any further action over allegations that he abused parliamentary expenses.

In a statement, Lord Paul said: "On the issue of the taxation position of peers, of course it goes without saying that I will be fully complying with the change in the law which the Government is bringing forward.

"I strongly support the Government's proposals in relation to the taxation status of peers and MPs and the membership of the House of Lords, and the House of Commons. I will be paying all the taxes. I will be qualifying to be in the House of Lords."

Indian-born steel tycoon Lord Paul had come under fire in the wake of the revelation last week that Tory deputy chairman and major donor Lord Ashcroft is a non-dom, despite pledging to become a "permanent resident" when he was awarded a peerage 10 years ago.

The Labour peer has insisted it was "ridiculous" to compare his situation because he has always been open about his tax status.

The Met refused to confirm it had been investigating Lord Paul's expenses.