Former Conservative leader William Hague was kept informed about the negotiations of Lord Ashcroft's tax status, leaked papers have suggested.
William Hague has insisted Lord Ashcroft stuck to the terms of an agreement he made in 2000 to become a UK resident before getting a peerage.
He was said to be "satisfied" with the final outcome in July 2000, Cabinet Office papers seen by the BBC showed.
Mr Hague insists he only found out recently the deal had not led to Lord Ashcroft being non-domiciled for tax.
Lord Ashcroft, a major party donor and deputy chairman, became a peer even though he recently declared he had not paid full UK tax on foreign income.
But he told the BBC that being a full UK taxpayer was never part of the deal.
The Commons public administration committee is launching a fresh inquiry.
Mr Hague said leaked documents showed No 10 knew all the details of the deal that was agreed ahead of the Tory donor joining the House of Lords in 2000.
Greater clarity
The draft version of the government document reveals the then Tory chief whip James Arbuthnot - who was representing Lord Ashcroft - negotiated for four months.
Mr Hague was said to be "satisfied the action adequately met the terms of Mr Ashcroft's undertakings".
Lord Ashcroft's tax status has been the source of political controversy ever since he became a peer.
Senior party figures have said they only found out very recently that he was classed as non-domiciled for tax purposes.
But BBC chief political correspondent Norman Smith said the leaked document was certain to fuel Labour and Liberal Democrat demands for greater clarity about when senior Tories first became aware he was a "non-dom".
Meanwhile, Lord Ashcroft has not replied to requests from the public administration committee to give evidence to their inquiry into the circumstances of his peerage.
Peers on the sub-committee on Lords' interests will also consider a Labour MP's complaint that Lord Ashcroft breached the code of conduct of the upper house.
The MP claims he failed to honour a pledge to become a permanent UK resident as a condition of his new status.
Earlier this month, Tory leader David Cameron rejected claims that he mishandled the row.
He told the BBC he did not "accept" criticism he was weak over the issue for fear of offending the Tory peer.
The Conservatives have said Lord Ashcroft will stand down from his party role after the election. Labour says he should be sacked immediately.
The Tories have also sought to play down his recent financial influence on the party, saying he contributed only 1% of its total funds over the past year.
But Labour claims he is helping to bankroll the Tories' campaign in marginal seats.
The peer is thought to have given more than £4m to the Tories since Mr Cameron became leader in 2005.
