After buying the business in 1992, Mr Joseph employed Mr Raynsford, MP for Greenwich and Woolwich, for four years. Mr Joseph is still a director of Raynsford Dallison Associates, now part of a group that has been given contracts by the DETR.
Conservative environment spokesman Simon Burns said he would write to the DETR permanent secretary Richard Mottram to clarify what the minister knew of the contracts.
Mr Joseph is managing director of Hacas, which bought the minister's company for£25,000. The company has increased turnover by almost£2m to£5m since the general election, and has almost doubled its staff to 50. Its latest annual report says its profits growth is due to government housing policies. Although it works for the Audit Commission and the Housing Corporation, most of its government work is for the DETR.
Mr Raynsford, a former housing charity leader, sold his consultancy before his appointment as shadow minister in 1993. However, while serving as Labour's spokesman in opposition on London and housing, he continued working as a housing consultant and earned an estimated£200,000 from Mr Joseph's company. He gave up all consultancy work after labour won the general election.
The DETR said: 'The department is confident that all contracts have been awarded in connection with proper procedures. Nick Raynsford has had no connection with the company since April 1997. His past involvement has been registered and declared during debates'.
And the Sunday Express (p15) reports that Mr Raynsford is being persuaded to take on Ken Livingstone in the battle to become mayor of London - but only after several big names dropped out.
He is being talked into standing because senior ministers like Northern Ireland secretary Mo Mowlam and health secretary Frank Dobson are refusing to allow their names to go forward.
A senior Downing Street source said: 'Nick is the ideal candidate. He would lead London in a way that would not clash with the government's policy'.