| Julia Gillard could be forced to call an election if charges against Craig Thomson are proven [EPA]
Australian police are investigating claims that a government politician allegedly misused his trade union credit card to pay for sex with prostitutes.
The accusation, if proven, could bring down the country's minority government, headed by Julia Gillard, the prime minister.
Labor member of parliament Craig Thomson, a former health union boss who heads an economics committee in the parliament, has strongly denied using a union credit card to pay for brothel services before he was elected to parliament. Thomson says his signature was forged by an unnamed acquaintance.
It is alleged that Thomson paid for escort services and drew out more than $A100,000 ($104,000) in cash on a card issued by the Health Services Union during his employment there in 2003 to 2005.
Local media, led by the Sydney Morning Herald newspaper, have reported in detail the use of the credit card for escort services but have not directly linked Thomson to the payments.
Thomson said he would stand down from his committee role, as pressure on him mounted over the accusations.
"I continue to reject claims of wrongdoing. I will continue to serve as a member of the committee as it undertakes its important work," said Thomson.
Gillard has staunchly defended Thomson, who if convicted of a crime and sentenced to a minimum of one year's jail would become ineligible to sit in parliament.
A conviction would force a by-election which Labor, whose policies of carbon and mining taxes are deeply unpopular, would struggle to win.
Thomson holds his seat in the Central Coast of New South Wales with a majority of five per cent and if Labor loses that seat, it will lose its parliamentary majority,
Australian police on Tuesday said they were launching an inquiry into the claims after an opposition politician supplied them with information on Thomson.
"Shadow Attorney-General George Brandis has provided information to police in relation to a number of matters concerning a federal Labor MP," New South Wales state police said in a statement.
"This correspondence has now been referred for internal assessment to determine whether a criminal offence has occurred," the statement said.