A Conservative former minister has become the first Tory MP to publicly call for Nadhim Zahawi to stand down as party chairman.

Caroline Nokes said there are “too many unanswered questions” over the former chancellor’s multi-million pound tax dispute and that he is “leading too many front pages”.

“When you become the story it’s a distraction from anything else the government is trying to do,” she told TalkTV.

“And I really think in order to get this cleared up Nadhim should stand aside and let the investigation run its course.”

Politics news – latest: Tory party turning on Zahawi

On Monday, Prime Minister Rishi Sunak ordered a potentially far-reaching investigation into Mr Zahawi but resisted calls to sack him, saying he retained “confidence” in his colleague.

The inquiry by new ethics adviser Sir Laurie Magnus is expected to focus on whether the cabinet minister breached the ministerial code with the HMRC settlement he made while he was chancellor, but it could extend to his prior tax arrangement and whether he lied to the media.

Sky News understands that, as part of a settlement with HMRC, Mr Zahawi paid a penalty to the tax collector.

The exact size of the settlement has not been disclosed, but it is reported to be an estimated £4.8m including a 30% penalty.

Questions were first raised about Mr Zahawi’s tax affairs last summer when he was running to be party leader, but the senior Tory MP insisted at the time that he was “clearly being smeared” and had always paid his taxes.

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Other Tories are privately turning on Mr Zahawi, with one former minister telling Sky News: “He’s toast.”

Opposition parties are calling for him to be sacked while Lord Bob Kerslake, the former head of the Civil Service, told Sky News Mr Zahawi is in a “pretty perilous position” as several facts need clarifying – including the length of his tax investigation and what he told Mr Sunak about it.

Earlier, Home Office minister Chris Philp suggested the PM was not aware Mr Zahawi had paid a penalty to the taxman, or of any prior investigation into him, when he appointed him as party chairman.

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Minister: ‘PM acted quickly’

Mr Sunak defended Mr Zahawi in the House of Commons last week, but this was before the cabinet minister released a statement admitting he paid what HMRC said “was due” after it “disagreed about the exact allocation” of shares in YouGov – the polling company he co-founded – an error he noted was “careless not deliberate”.

Sources close to Mr Zahawi are maintaining he is “absolutely not standing down”, and he refused to answer questions on his political future when approached by journalists this morning.

In a statement last night he said: “I am confident I acted properly throughout and look forward to answering any and all specific questions in a formal setting to Sir Laurie.”

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