The House of Lords embarked on a hasty damage-limitation exercise yesterday by preparing new powers to suspend any member found to have broken the rules in the “cash for peers” crisis.

Four Labour peers who allegedly offered to change the law in return for fees of up to £120,000 could be barred from the chamber and forced to forfeit their £350 daily allowance if they are suspended.

Two of them, Lord Taylor of Blackburn and Lord Snape, stood up after an emergency statement in the Lords and offered pre-emptive apologies in case they are found to have done anything wrong.

“If I have done anything that has brought this House into disrepute I most humbly apologise,” Lord Taylor said, while still insisting that he had followed the rules.

Lord Snape said: “May I appeal to noble Lords in all parts of the House to allow me the opportunity to refute those allegations before your Lordships’ House and elsewhere?”

The two other peers, Lord Moonie, a former defence minister, and Lord Truscott, a former energy minister, were absent. They emphatically deny wrongdoing.

The Times has also discovered that Lord Moonie gave a parliamentary pass to his son Graham, who was working for a PR and lobbying firm, the Madano Partnership. His son worked on an account for AEA, an energy consultancy created out of the Atomic Energy Agency, a company that Lord Moonie serves as a director.

The pass was removed in June, as new rules came in that would have required his son to declare his outside work. The peer told The Times that the AEA link was a coincidence and that his son never used the pass, which was provided in a personal capacity.

The fate of the four peers will be decided within weeks by a panel including the former Lord Chancellor, Lord Irvine of Lairg, and the former head of MI5, Baroness Manningham-Buller. They have asked for any recordings of conversations by The Sunday Times to be handed over.

The paper released segments of conversations with Lord Taylor on TimesOnline yesterday. Lord Taylor, an ally of Jack Straw, the Justice Secretary, is heard saying that some companies pay him up to £100,000 for help with commercial problems. He can be heard telling reporters: “You’ve got to whet my appetite to get me on board.”

The Lords is expected to have to investigate the claims itself after it emerged that Scotland Yard was unlikely to mount a full-scale inquiry. Detectives are thought to be wary about potential entrapment or the use by journalists of leading lines of questioning, which would undermine any attempt to pursue a criminal case.

The affair took centre stage in an emergency discussion in the Lords. Baroness Royall of Blaisdon, Labour’s Leader of the Lords, said that she had asked Lord Brabazon of Tara, chairman of the Lords Committee for Privileges, to review the sanctions against those who break the rules of the House. At present, the harshest action is for a peer to be named and to have his or her conduct debated in the Lords’ chamber. Lord Brabazon is unlikely to be able to recommend expulsion since it would mean defying the “Writ of Summons” — the invitation to new peers from the Queen.

There were signs yesterday of a backlash over the Sunday Times story. Lord Harris of Haringey said that he, too, had been approached by the newspaper, but not named, and wanted to give evidence to the inquiry. “I was the subject of the journalists’ deception and attempted entrapment,” he said.

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