Labor is calling on the prime minister to sack Energy Minister Angus Taylor after his use of an altered document sparked a police investigation.
Prime Minister Scott Morrison is standing by Energy Minister Angus Taylor as NSW police investigate his use of an altered document to attack Sydney Lord Mayor Clover Moore's record on climate change.
A NSW police spokesperson confirmed on Tuesday it is in the "early stages of investigating information into the reported creation of fraudulent documentation".
Detectives from Strike Force Garrad will investigate and determine if any criminal offences have been committed, the spokesperson added.
The document at the centre of the investigation is a version of the City of Sydney's 2017-18 annual report containing grossly inflated travel expenditure figures.
Mr Taylor used the wildly inaccurate figures in a letter he sent to Clover Moore, accusing her of driving up the council's carbon emissions by spending more than $15 million.
The letter containing the false figures was reported on by the Daily Telegraph at the end of September, sparking a complaint from Cr Moore.
In response to her complaint, the minister's office forwarded a version of the City of Sydney's 2017-18 annual report as evidence of Mr Taylor's claims.
However, the figures did not match those detailed in the council's publicly available annual report which puts the spending at a much more modest $6,000.
Labor seized on the police investigation on Tuesday, calling on the prime minister to ask Mr Taylor to step down from his Cabinet.
But Mr Taylor's position appears safe for now.
Mr Morrison, who said at the start of Question Time he was unaware of the police investigation, told Parliament on Tuesday afternoon that he had since spoken to the NSW Police Commissioner.
He said the Commissioner had informed him that their investigation was based solely on allegations made by Labor's shadow Attorney-General Mark Dreyfus.
"Based on the information provided to me by the Commissioner, I consider there is no action required by me," he told Parliament.
Mr Taylor has admitted the travel figures he cited were wrong but insisted the council had different versions of its annual report online.
"This is an outrageous accusation against me by the Labor Party," he told Parliament on Tuesday.
"I reject absolutely the suggestion that I, or any members of my staff, altered the documents in question."
He said he will cooperate with the investigation.
Additional reporting by AAP