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However, the scandal, which would usually set tongues wagging in Canberra but go little further, has serious ramifications for the prime minister. When parliament s this week his party is unlikely to let the matter drop.

His situation is illustrative of the awful truth that scandal can rear its ugly head at any time," he wrote in the Sydney Daily Telegraph. But she has little choice. Former Labor powerbroker Graham Richardson last week acknowledged that Mr Thomson could bring down the government.

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If he res or is sacked, it would trigger a by-election in his marginal New South Wales seat that would almost certainly see the fall of the Labor government. Even Labor insiders have admitted that the situation for Ms Gillard appears dire.

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He also denies reports that he made calls to several escort agencies from hotel rooms in Melbourne in He claims another man forged his ature to authorise the payments - prenant has refused to name him. Mr Thomson, whose wife is seven months pregnant with the couple's second child, maintains he has done nothing wrong. Jump to Julia Gillard's grip on power tested by MP prostitute scandal Julia Gillard's fragile grip on power in Australia has been threatened by one of her own MPs after he was accused of using union funds to pay for prostitutes.

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Ms Gillard enjoys the thinnest of majorities - of just one canberrz - in parliament and if she is to stay in power must keep all of her MPs in line. Tony Abbott, leader of the opposition, who claims the government is trying to cover up "grubby facts", has demanded that Mr Thomson be stripped canbedra the chairmanship of a parliamentary economics committee and give parliament a full explanation of the circumstances.

So far, she has given Mr Thomson her full support, twice declaring in parliament that he has her confidence.

Mr Thomson is not accused of breaking any law and the police are not investigating the matter.

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