London, Oct 13 : Indian-born steel tycoon Swraj Paul is to step down as Deputy Speaker of Britain's House of Lords for the duration of an expenses inquiry launched at his request, the upper chamber of parliament said.

Paul, who is the founder-chairman of the Caparo Group of industries and a financial backer of Britain's ruling Labour party, requested the probe following newspaper allegations that he wrongly claimed 38,000 pounds in expenses for overnight stays in London.

A spokesman for the House of Lords said there will be an investigation into Paul's expense claims and that he will cease to deputy speaker while the investigation is carried out.

The move follows a report in the Sunday Times that Paul claimed the expenses despite never having stayed in an Oxfordshire flat that he claimed was his first home.

Paul has confirmed that he had never stayed in the flat and that he was actually based in London, where he had lived most of his adult life, but said he believed The Sunday Times was "stretching the truth".

Welcoming the inquiry, he said: "In the Lords, the only day you claim money is when you attend the Lords - it's a daily allowance. That is all I claimed."

"I always had the flat for use when I was looking in the area for a place to buy, but no, I never slept in it because I eventually found somewhere else to buy a property. But that place was earmarked for me. I always had it for my use," Paul told The Guardian newspaper.

Meanwhile, the independent auditor for the lower house of parliament - the House of Commons - Tuesday began sending out letters to hundreds of MPs with provisional requests and information about repaying "unreasonable" expenses.

Prime Minister Gordon Brown will pay back a sum of 12,000 pounds.

The House of Lords is yet to undergo a similar comprehensive audit, although two members - Bangladeshi-born Lady Paula Uddin and Lord Clarke of Hampstead - are being investigated by police. (IANS)