The latest expense revelations from The Daily Telegraph reveal that Purnell saved thousands of pounds in tax after telling parliamentary authorities that Manchester was his main home, while London was actually considered to be his primary residence by HMRC.
He claimed the second home allowance on his London flat but in October 2004 he sold the flat and did not pay capital gains tax on the sale.
Prime Minister Gordon Brown has pledged to crack-down on MPs who abused the system, prompting speculation that Purnell could be forced to resign.
A spokesman for Purnell said: “Any allegation that James avoided capital gains tax is completely untrue. When he bought his constituency home, the sale of his London flat fell through, but it was sold within the period that HMRC continue to treat it as not being liable for CGT.”