David Cameron has come in for fresh criticism over the investigation into former defence secretary Liam Fox's working relationship with his friend Adam Werritty.
In a new report the Prime Minister is rebuked for failing to call in his independent adviser to look at claims the ministerial code had been breached.
MPs also claim the advisory role itself "lacks independence" after a new candidate was appointed behind closed doors by Mr Cameron.
Dr Fox resigned last year after being found guilty of breaching the code in his relations with lobbyist Mr Werritty.
It followed allegations that were initially investigated internally by the Ministry of Defence and then by Cabinet Secretary Sir Gus O'Donnell.
The Prime Minister's former adviser on ministerial interests, Sir Philip Mawer, who quit the post shortly afterwards, has since expressed his "frustration" that Mr Cameron did not call him in to handle the case.
In its report the Public Administration select committee (PASC) echoes Sir Philip's unease, criticising the way he "was apparently cut out of the loop altogether" despite the huge amount of interest in the case.
The committee goes on to claim the role of independent adviser "lacks independence in practice" as it is "in the gift" of the PM and cannot instigate investigations.
It also criticises the choice of Sir Alex Allan to replace Sir Philip, claiming a recently retired senior civil servant was not suitable for a position that requires independence from government.
The PASC found "at present, the title of independent adviser is a misnomer".
It added: "We do not in any way question Sir Alex's integrity, ability or commitment, but neither he nor the role to which he has been appointed is independent of government in any meaningful sense."