Scotland Yard is examining claims that Labour offered late Independent MP Peter Law a peerage if he refused to stand at the last election.
Trish Law said her MP husband Peter came under pressure
Mr Law's widow says he was asked by a senior Labour figure not to stand in Blaenau Gwent, but the party says this is "categorically not true".
Also a Welsh assembly member, he was then expelled from Labour after winning its safest Welsh parliamentary seat.
The inquiry is by detectives already looking at claims of cash for honours.
Mr Law, 58, died on Tuesday, a year after he was diagnosed with a brain tumour during the 2005 general election.
He had been a lifelong Labour member and stood against the party in protest at its decision to use an all-women shortlist to choose the candidate to replace the retiring Blaenau Gwent MP.
He overturned a 19,000 majority in the seat in Labour's south Wales heartland, and won a 9,000 majority of his own.
His widow Trish told BBC Wales on Thursday that he had been put under pressure, which included "quite a number of phone calls from high-ranking politicians".
Peter Law overturned the largest Labour majority in Wales
Mrs Law said her husband told her he might be awarded a peerage if he abandoned his plan to fight the seat.
She told the Dragon's Eye programme: "That's quite a lot of pressure and it was pressure at the time when he was quite ill as well you know, but Peter couldn't be bought."
On Friday Welsh Secretary Peter Hain wrote to the Conservatives denying emphatically that he offered a peerage to persuade Mr Law not to stand as an independent in the last election.
Mr Hain wrote to Cheryl Gillan, the shadow Welsh secretary: "It is a straight lie for anyone to claim that I had such a conversation, and the Labour Party has issued a statement to make absolutely clear that no such offer was made by anyone".
A Metropolitan Police spokeswoman said: "We are aware of the allegation made to the media suggesting the Labour Party offered Peter Law a peerage if he refused to stand as an independent.
"We will be reviewing that allegation."
Of the claim, Labour said: "It's categorically not true. It did not happen."
Another Labour spokesman said it was well known that Mr Law's friends in the party pleaded with him not to stand, "but there was no offer of a peerage."
The Conservatives have called on Prime Minister Tony Blair to carry out a "full and independent investigation" into the claims.
Welsh assembly deputy presiding officer John Marek, also a former Labour member, said Mr Law also told him he was offered a peerage.
Dr Marek, the Wrexham AM who left Labour in 2003, said: "I remember Peter telling me that a high-ranking Labour official phoned him from London and in the course of the conversation said: 'There may even be a place in the Lords for you'."
The cash-for-honours inquiry was originally launched in response to a complaint by Scottish and Welsh nationalist MPs.
Scottish National Party MP Angus McNeil said he had alerted Scotland Yard to the allegations.
Police have extended their inquiry to look into loans to political parties as far back as 2001.
It was launched amid claims Labour had broken the law preventing the sale of honours, ahead of last year's election, and has since been widened to cover the activities of other parties.