Theresa May's deputy is being investigated by the cabinet secretary after a young Conservative writer alleged that he had touched her knee, made inappropriate comments, and some time later sent her a suggestive text.
Writing in the Times, journalist Kate Maltby, 31, said she was having a drink in 2014 with Damian Green, the 61-year-old who is now first secretary of state (FSS), when she felt a "fleeting hand against my knee". She also alleged that he told her his wife was "very understanding".
Green denies the allegations and on Tuesday it was reported that he had instructed libel lawyers Kingsley Napley.
Maltby said nothing about the incident at the time and had no more contact with him. But, after a year and following a piece in the Times in which she was photographed in a corset, Green allegedly sent her a text message that said: "Long time no see. But having admired you in a corset in my favourite tabloid I feel impelled to ask if you are free for a drink anytime?"
In a statement to BuzzFeed News on Tuesday, Downing Street said: "An allegation has been made in relation to the FSS, which he strongly denies. The prime minister has referred the matter to the cabinet secretary to establish the facts and report back as soon as possible."
Green, who has known May since they were at Oxford together and is her closest cabinet ally, has denied the allegations that he made sexual advances towards Maltby as "untrue [and] deeply hurtful", the Guardian reported.
In her article for the Times about the alleged incident in the pub, Maltby said: "He offered me career advice and in the same breath made it clear he was sexually interested." After she declined, and cut off communication with Green, she reflected that the experience had made her "aware that there might be a price I was not prepared to pay".
Maltby, who knew Green peripherally through her parents, said the incident left her feeling "awkward, embarrassed and professionally compromised".
In a statement to the BBC, Green said: "The text I sent after she appeared in a newspaper article was sent in that spirit – as two friends agreeing to meet for a regular catch up – and nothing more," he said.
"This untrue allegation has come as a complete shock and is deeply hurtful, especially from someone I considered a personal friend."
The government's chief whip, Gavin Williamson, also told the Express and Star that it was the view of the PM that "any situation where someone has done anything that is wrong or illegal, this has to be reported to the police straight away".
It comes amid a number of reports revealing allegations of serious sexual assault and harassment by both Tory and Labour MPs in Westminster.
Former Tory minister Anna Soubry claimed that in normal circumstances Green would be suspended. She told Sky News: "The allegation against Damian Green has been reported to the Cabinet Office and there will be an investigation ... in normal circumstances that person would be suspended."
Green has been contacted for comment.