Britain's Electoral Commission on Wednesday announced a formal investigation into how Prime Minister Boris Johnson paid for a lavish makeover of his Downing Street flat, seriously escalating a simmering scandal.

British Prime Minister Boris Johnson leaves 10 Downing Street to attend Prime Minister's Questions at the House of Commons, in London, Britain, on Oct 21, 2020. [Photo/Xinhua]

"We are now satisfied that there are reasonable grounds to suspect that an offence or offences may have occurred. We will therefore continue this work as a formal investigation to establish whether this is the case," the watchdog said.

Prime Minister Boris Johnson on Wednesday denied breaking the rules over the refurbishment of his Downing Street flat, as Britain's Electoral Commission watchdog launched a formal probe.

"I've conformed in full with the code of conduct and ministerial code," Johnson told parliament, as he came under sustained pressure to state who paid for the lavish revamp, and wider accusations of cronyism and favoured access.