Australian MP Craig Thomson in sex scandal inquiry

Julia Gillard (file photo. Copyright: Getty Images) Prime Minister Julia Gillard has expressed full confidence in Mr Thomson

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Australian police are investigating claims an MP from the governing Labor Party misused his trade union credit card to pay for sex with prostitutes.

Police said they were examining new evidence against Craig Thomson.

Mr Thomson has denied any wrongdoing, and has already said an unnamed friend forged his signature to use the card.

A conviction for theft or fraud could bring down Julia Gillard's minority government, which has a working majority of just one seat.

Prime Minister Gillard has expressed "full confidence" in Mr Thomson, and said any investigation into his conduct should be allowed to run its course.

'Deep unpopularity'

The new evidence was presented to police by an opposition politician.

"This correspondence has now been referred for internal assessment to determine whether a criminal offence has occurred," police said in a statement.

It is alleged that Mr Thomson paid for escort services and drew out more than $A100,000 ($104,000; £63,000) in cash on a card issued by the Health Services Union during his employment there in 2003 to 2005.

Mr Thomson, who entered parliament after the 2007 election, has claimed that other union officials had access to that credit card, and denies any wrongdoing.

The country's employment watchdog, Fair Work Australia, is also carrying out its own investigation.

Mr Thomson holds his seat in the Central Coast of New South Wales with a majority of 5%.

The BBC's Nick Bryant in Sydney says that given the Gillard government's deep unpopularity, the Liberals would be expected to win a by-election at a canter.

If Labor loses that seat, of course, it also loses its parliamentary majority, our correspondent writes.

The allegations against Mr Thomson were first published two years ago by local newspapers. He mounted a defamation case against the newspapers - which he later dropped.

It has since been reported that the New South Wales Labor party helped Mr Thomson with $A90,000 towards his legal bills. Bankruptcy disqualifies people from sitting in parliament.

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