A "big budget" pornographic film was shot in a London hospital when it hired out one of its wards to a film company.
The movie generated "substantial income" for the hospital, Conservative MP Penny Mordaunt said.
Ms Mordaunt, Portsmouth North MP, was speaking during a House of Commons debate on improving transparency in government accounting, on Monday.
NHS Kensington and Chelsea said the filming occurred before 2002 when the primary care trust (PCT) formed.
"When I was director of Kensington and Chelsea Council, I discovered that one of our local hospitals was hiring out one of its closed - but fully-equipped - wards to a film company to use as a film set," Ms Mordaunt said.
"To add insult to injury, the movie was a pornographic one.
"Although I cannot claim to have seen the final picture - as I understand, these things are no longer claimable on parliamentary expenses - it was a big-budget affair and generated substantial income for the hospital."
"But apart from cheering up a few of the in-patients, it cannot be said to be contributing to the objectives of the primary care trust."
NHS Kensington and Chelsea said: "We can confirm this incident occurred some time prior to 2002 under a predecessor organisation's management and prior to the formation of PCTs."
Kensington and Chelsea Council has been contacted by BBC London but has not yet commented on the story.