David Cameron has dismissed calls for Maria Miller to be sacked after MPs dramatically watered down an independent probe's criticism of her expenses.
The cross-party Standards Committee ordered the Culture Secretary to make an humiliating apology on the floor of the House for failing to co-operate with commissioner Kathryn Hudson's 15-month investigation.
But they took the highly unusual step of overruling the key finding that she should hand back £45,000 in overclaimed accommodation allowances - demanding just £5,800 instead.
In extraordinary correspondence published alongside the report today, Ms Hudson also accused Mrs Miller of "misrepresenting" her investigation in an attempt to "discredit" her.
The commissioner's inquiry was launched in December 2012 following allegations that Mrs Miller had used some £90,000 in expenses between 2005 and 2009 to fund a house where she lived with her parents.
The committee's report cleared the arrangement on the basis that the Tory MP had reduced her claims to take account of the situation - although Ms Hudson noted there were no "formal arrangements by which she could demonstrate transparently that she was not claiming for their costs".
They agreed with Ms Hudson that Mrs Miller should "properly" have declared the London property as her main family home because she was spending most nights there.
But the committee said the decision to claim expenses in the capital rather than on rented accommodation in her Basingstoke constituency was "finely balanced" and the MP had acted "reasonably in the light of the guidance available at the time".
The report said Mrs Miller's financial arrangements were so "complex" it was difficult to track the changes in her borrowing over the period, and made clear she bore "significant responsibility" for delays in the investigation.
The mortgage on the five-bedroom terraced house was £420,000 when she was elected in 2005.
By 2009 that figure had risen to just under £580,000.
The commissioner backed a "strict" interpretation of the rules from the time, arguing that meant Mrs Miller was only entitled to claim interest on the £215,000 mortgage with which she originally bought the property in 1996.
As a result, Ms Hudson found she had received £45,000 too much over the four years and should repay that amount.
The commissioner also questioned whether the MP had acted in a "genuine" fashion and said the issues involved were "very serious".
"Some of the mortgage increases may have occurred several years before Mrs Miller was elected," Ms Hudson said.
"However, once she was elected, it was Mrs Miller's responsibility... to ensure that she was familiar with, and abiding by, the rules relating to Members' claims set out in the Green Books.
"She should also have sought advice if she was in doubt about the interpretation of those rules or their application to her circumstances.
"In particular I find it difficult to believe that Mrs Miller genuinely thought she was entitled to make the additional claim for her extended mortgage in 2007 without any consultation with the House authorities or agreement from them.
"Her apparent misuse of the allowances system continued for four years from May 2005 to the end of April 2009 and seems to have been brought to an end only by the expenses scandal of 2009-10 when she abruptly ceased to claim."
After the commissioner delivered her findings in February, Mrs Miller sent a furious response lambasting the "flawed" and "distorted" probe.
But Ms Hudson stuck to her guns, writing days later to rebut the "misrepresentations of my inquiry and my memorandum, by which Mrs Miller has attempted to discredit both the memorandum and myself".
"I remain of the view that my inquiry and the memorandum are robust and that the conclusions are sound," she added.
However, the committee's final report sided with Mrs Miller - suggesting that even if the commissioner was strictly right about the rules, it was "inappropriate" to apply them.
"When the rules were formulated the intention was to prevent MPs withdrawing equity from their property for non-housing purposes," the report said.
"No thought was given to the effect of the rule on newly elected Members who might claim ACA on a property owned for decades, where the mortgage had increased over the years...
"Whatever the strict construction of the rule, it was reasonable for Mrs Miller to claim the interest on her mortgage as it was when she entered the House, rather than as it was when she first purchased the property."
The committee calculated that between 2005 and 2008 Mrs Miller claimed between three quarters and four fifths of the mortgage interest she was paying out, and said they were "satisfied" there was no subsidy of her parents.
However, in 2008-2009 she claimed the total mortgage interest sum for several months and at other times just a hundred pounds below or even slightly above.
Mrs Miller volunteered that she needed to repay £4,000 as a result of the "inadvertent" error, blaming sharp falls in interest rates for the confusion.
But the committee ruled that the right figure was £5,800.
The MPs condemned Mrs Miller for her attitude to the commissioner's inquiry, saying she had breached the House's Code of Conduct by failing to co-operate fully.
"Much of the delay and difficulty in this case has arisen from incomplete documentation and fragmentary information. Mrs Miller has to carry significant responsibility for that," the report said. "We are concerned that Mrs Miller did not pay as close attention to the rules of the House as she should have done."
Speaking during a visit to Birmingham Airport, the Prime Minister said: "Maria Miller is doing an excellent job as Culture Secretary and will continue to do that.
"If we look at this report, yes, of course these issues do matter but she was cleared of the original allegation made against her.
"It did find an over-payment which it refers to as an administrative error and it's important Maria repays that money and that's exactly what she is going to do.
"I think people should leave it at that."
Mrs Miller, believed to be the first minister for decades to make a personal apology on the floor of the House without resigning, spoke from the backbenches for less than a minute.
"The committee did recommend that I apologise to the House for my attitude to the commissioner's inquiry and I of course unreservedly apologise.
"I fully accept the recommendations of the committee and thank them for bringing this matter to an end."
But Labour MP John Mann - whose complaint triggered the investigation - said Mrs Miller should resign.
" Her attitude to this inquiry will infuriate the public, who have had enough of the MPs' expenses scandal and expect better from a Government minister," he said. "The committee's credibility is damaged by undermining (the commissioner's) conclusions," he added.
Robert Oxley, campaign director of the TaxPayers' Alliance, said: "Maria Miller was hardly contrite in her brief apology to the House of Commons.
"The Cabinet Minister failed to properly co-operate with the investigation into her expenses and the considerable differences between the findings of the Commissioner and the Standards Committee are sure to leave taxpayers perplexed.
"Given the circumstances, and the fact that she has had to repay thousands of pounds of taxpayers' money that she wrongly claimed, a bit of humility wouldn't have gone amiss."
Mrs Miller and her lawyer husband are said to have bought the London home for £234,000 in 1996. They sold it in February this year for just under £1.5 million.
Under the new expenses regime introduced by the Independent Parliamentary Standards Authority in 2010, MPs are no longer allowed to claim mortgage interest bills.