Claims that George Osborne tried to sit in a first class train carriage with only a standard ticket were flatly rejected by the Chancellor's office and rail company Virgin on Friday night.
The Twittersphere went into a frenzy about a television journalist's account of what she called a "stand-off" between one of Osborne's aides and a ticket inspector.
But a spokesman for Osborne said on Friday that he had simply decided to upgrade at the last minute and his staff had sought out the train manager to pay the difference.
"The Chancellor got a different train than planned due to diary change following a series of meetings in his constituency," the spokesman said.
"As he had no seat reservation on the new train which was crowded, he decided to upgrade - and obviously intended and was happy to pay.
"An aide sought out the train manager and paid the ticket upgrade."
The Chancellor's version was backed up by Virgin Trains, who said in a statement that the issue had been dealt with "amicably".
"The Chancellor, who was travelling in first class accommodation, held a standard class ticket. As soon as the train left Wilmslow, an aide went to find the train manager to explain the situation and arrange to pay for an upgrade. It was agreed that the Chancellor would remain in first class and an amount of £189.50 was paid by the aide to cover the upgrade for Mr Osborne and his PA.
"The situation was dealt with amicably between the train manager and George Osborne's aide. At no time was there a disagreement or a refusal to pay for the upgrade. Nor was there any discussion between the train manager and Mr Osborne."
ITV reporter Rachel Townsend, who was on the train - the 1511 from Wilmslow to London Euston - live tweeted what she described as a "stand-off".
The journalist tweeted: "Very interesting train journey to Euston Chancellor George Osborne just got on at Wilmslow with a STANDARD ticket and he has sat in FIRST CLASS."
She told ITV: "George Osborne got on the train with aides at Wilmslow and went straight to first class.
"Then his aide approached the ticket collector right next to me. He said he is travelling with George and he has a standard ticket but can he remain in first class?
"The guard said no. The aide said Osborne couldn't possibly sit in standard class. The guard replied saying if he wants to stay it's £160.
"The aide said he couldn't pay and he couldn't really sit in standard. The guard refused to budge.
"The guard went on gathering tickets and later told me Osborne had agreed to cough up the £160."
Shadow Cabinet Office minister Michael Dugher said: "Another day, another demonstration of how out of touch this Government is.
"Just like Andrew Mitchell, George Osborne obviously thinks it's one rule for him and another for the plebs he's so keen to sit apart from. So much for 'we're all in it together'."
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