The former MP for Torbay Claudia Webbe is under investigation by police over claims she sent nude photographs of a woman to her sister.
Scotland Yard said the investigation, launched after it was alleged that a 50-year-old woman was harassed, is being treated as a blackmail case.
Webbe is reported to have admitted sending the pictures, but denied blackmail allegations, it was claimed.
Police were called to Webbe’s home in Croxeth, Cardiff, in June after being approached by the woman, who alleged the married mother-of-two had bullied her for money.
The 53-year-old, who was MP for Torbay between 2005 and 2012, denies any blackmail allegations.
Scotland Yard said it was made aware of the allegations on 20 June and a review of the circumstances was launched.
Webbe is not currently subject to any investigation, and said on Twitter: “Firstly I would like to state that I did not blackmail or misuse any funds as such.”