David Cameron's former "family champion" Emma Harrison has denied any wrongdoing over reports she received £1.7 million from leasing out properties - including her family stately home - to her welfare-to-work business.

The Observer reported that the money was paid into two companies and a pension fund in which Mrs Harrison or her husband, James, had a controlling interest.

On Friday, Mrs Harrison announced she was standing down as chairman of A4e - the firm which she built up and which made millions from Government contracts for getting the jobless back into work.

She had already quit as an unpaid advisor to No 10 following the disclosure that A4e was at the centre of a police fraud investigation.

In a statement last night, Mr and Mrs Harrison said their personal finances and those of the companies they owned were "legal, above board, open and transparent".

According to The Observer, the couple were paid £316,000 for allowing A4e to use their country home - Thornbridge Hall in Derbyshire - for board meetings and other events.

They were said to have been paid another £1.4 million for leasing out two other properties to Mrs Harrison's own firm, including its Sheffield headquarters.

In a statement the couple said: "We have never misused or re-directed funds through our companies. Any transactions between our companies is 100% legitimate and has a full audit trail.

"We own personal properties personally, not through companies. We own business properties in businesses, not personally. The two are not to be confused.

"Our personal finances, and the finances of the companies we own are legal, above board, open and transparent and fully audited for legality.

"To suggest or report otherwise is false and we will take the appropriate legal action if claims to the contrary are made."