Disgraced Tory peer Lord Hanningfield has been arrested on suspicion of fraud allegedly committed while he was leader of Essex County Council.

Less than a week after being released early from prison for fiddling his House of Lords expenses the fraud lord is facing new accusations.

A spokesman for Essex Police revealed last night a 70-year-old man had been arrested following an investigation looking into expenses claims at County Hall.

And the news has provoked fresh calls for a full investigation into the running of Essex County Council during the entire period Lord Hanningfield was in charge.

Tom Smith-Hughes, leader of the opposition Lib Dems at Essex County Council, added: “The Liberal Democrat group knew that there were very serious allegations against Lord Hanningfield which had been referred by Essex County Council to police.

“We called for a full investigation into possible abuse of council facilities, use of chaffeur driven cars and a corporate credit card and demanded that the results of the investigation were made public to the Essex residents and council taxpayers.

“They are entitled to know if and how public money was being spent and receive full assurances that proper procedures were now in place.”

Mr Smith-Hughes said that inadequacies in County Hall systems have now been confronted and appropriate measures put in place.

But he did criticise the “apparent failure to declare concerns”, raised by the Lib Dems more than three years ago, earlier.

He said: “Justice must be done and seen to be done.”

Lord Hanningfield - real name Paul White - has just served a quarter of his nine-month sentence for fiddling his House of Lords expenses to the value of £14,000.

He has always denied the six counts of false accounting that he was jailed for in July.

He has already lost his seat at Essex County Council following his recent conviction and it is understood he is currently on a home curfew scheme which involves him being electronically tagged.

Details of the conditions attached to the curfew have not been revealed.

And it is not yet known whether any subsequent charge or conviction for the alleged fraud, while leader of Essex County Council, will have any bearing on his early release or result in him eventually serving more of his original sentence.

A spokesman at County Hall said: “Essex County Council is continuing to assist Essex Police in the ongoing investigation, therefore it would be inappropriate for us to comment further."

Lord Hanningfield has been bailed until January while officers from the Kent and Essex Serious Crime Directorate continue their investigation.