The parliamentary commissioner for standards has decided Peter Hain does have a case to answer over failing to declare £103,000 in donations to his Labour deputy leadership campaign.
John Lyon's office made the statement after Gordon Brown said he would not sack the work and pensions secretary - while indicating his fate is in the hands of investigating authorities.
In an interview with Monday's Sun newspaper, he said he expected Hain to continue in government.
"Peter has done a great job and it would be a great loss if he had to leave the government," Brown said.
"He took his eye off the ball and he has apologised. The matter must rest with the authorities, who will look at all these matters.
"It would be my expectation that he will carry on in government."
Over the weekend, Hain dismissed suggestions he tried to cover up donations to his failed campaign as "absurd", blaming "poor administration" for the failure to declare the money to the Electoral Commission.
But Conservative leader David Cameron said Brown was "dithering" over the issue, and that if Hain could not explain himself he "will have to go".
The Electoral Commission and the parliamentary commissioner for standards are both looking into the matter, as will the Committee on Standards in Public Life.
Crucial to their findings could be the role of a little-known think-tank called the Progressive Policies Forum in channelling donations to the Hain campaign.
Brown added: "Peter is a great minister and was a great secretary of state for Northern Ireland.
"He took us through the last bit of negotiations in the setting up of the assembly.
"The people of Northern Ireland welcome that and he has been a reforming secretary of state for work and pensions.
"He has apologised for the delay in submitting his financial records. No one is suggesting anyone has wrongfully given to his campaign. The issue is about delay."
The prime minister's spokesman told reporters on Monday morning that Brown continued to have "full confidence" in Hain.


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