Conservative MP Tobias Ellwood broke Covid rules by giving a speech at a dinner in London, the home secretary has said.
Mr Ellwood had defended his “well-intentioned attendance” at the event, saying it was “fully Covid compliant”.
He said he was sorry coverage of it had “muddled the government’s clear message as we head towards Christmas”.
But home secretary Priti Patel said he had broken the rules and suggested he could face a fine.
Asked about Mr Ellwood’s actions, the Prime Minister’s official spokesman said: “I would point you to the home secretary’s words.
“The PM has been clear throughout the pandemic that it’s vital for everybody to abide by the rules in order to suppress the virus and therefore protect the NHS and save lives.”
The Iraq Britain Business Council reception, on Tuesday, took place a day before the city entered tier three.
It was initially described as a “Christmas dinner” on the council’s website but its president, Tory peer Baroness Nicholson, later said it was a business event.
Asked by ITV News if Mr Ellwood’s attendance was a breach of the rules, Ms Patel said: “Well, it is. Of course it is exactly that.
“Having dinner outside of the rules with a large number of people is a breach of the regulations.”
Asked if there should be a punishment, Ms Patel said: “There are fixed penalty notices. I don’t know the details as to where this happened or the location, but I’m sure, as it is a breach, that will be followed up.”
The government’s tier two guidance states that “gatherings for work purposes are only allowed where they are reasonably necessary”.
Mr Ellwood, who chairs the Commons defence committee, attended the event the day after telling MPs that allowing families to meet over Christmas for five days “could be very dangerous indeed”.
He urged Health Secretary Matt Hancock to review the policy “so we don’t begin the new year with a third wave”.
In a statement, Mr Ellwood said it was a “business reception/dinner” where he “gleaned extremely useful intelligence” about the issues on the ground in the Middle East.
“The event took place at the respected Cavalry and Guards Club under strict Covid compliant conditions,” he said.
“For the duration of tier two restrictions function rooms that usually seat over 100 have been converted to hold business events for less than 30.
“I appreciate, given the current challenges, some will question the wisdom of my attendance.
“I am sorry coverage of my well-intentioned attendance may have muddled the government’s clear message as we head towards Christmas.
“Whilst the event was fully Covid complaint – perceptions count.”
The Daily Mail, which first reported Mr Ellwood’s attendance at the event, said it was attended by 27 people.
London moved from tier two to tier three on Wednesday morning.
Mr Ellwood, MP for Bournemouth East, told the BBC he had not been present for the whole event and that he had contacted the venue in advance to confirm it was Covid secure.
Other guests at the reception included a delegation from the Iraqi Embassy.
One of the original photographs appeared to show some attendees standing in small groups taking part in a drinks reception.
The rules for tier two state that alcohol at venues should be served as part of a substantial meal or with table service.
Baroness Nicholson told the BBC that once she became aware that the event have been described as a “party” she immediately asked for it to be clarified.
She stressed it was an important business function.
Asked why it had initially been labelled as a “Christmas dinner” and “party” on the organisation’s website, she said: “I think someone was trying to be cheerful”.
In a statement on its website, the IBBC said “working with the venue this event was fully Covid compliant”.