A Chorley councillor has been suspended by her party after being arrested on suspicion of benefit fraud claims.
Alison Hansford, who won the Wheelton and Withnell seat for the Conservative Party in the May local elections, was arrested by police officers on Thursday morning.
She has been questioned on suspicion of fraud by false representation and bailed to re-appear on April 15.
The 38-year-old, from Railway Road, Brinscall, has completely denied any wrongdoing, saying the accusations are “ridiculous”.
She said she was arrested after the Department of Work and Pensions received an anonymous tip-off.
Coun Hansford said: “I completely deny any wrongdoing and have fully co-operated with the police as I have nothing to hide.
“I have only ever wanted what is best for my family and my community, and that is why I became a councillor.
“I have been suspended from the Chorley Conservative Party as a matter of procedure, but will still carry out my councillor duties.
“What I am going through is horrendous, but as I said I have absolutely nothing to hide.”
The mother-of-two has long been a charity campaigner, and is well known for her involvement in Chorley Rugby Football Club.
She has also been fighting to take legal action against the makers of an epilepsy drug after her two children were diagnosed with a rare condition she believes to be caused by taking the medication during pregnancy.
She ran for election for the first time after former mayoress and veteran councillor Iris Smith retired after 22 years.
She went ahead-to-ahead against Labour candidate Neil Caton, and retained the seat for the Tories after gaining 1,282 votes to secure a majority of 134.
She has since been appointed to the equality forum, overview and scrutiny committee and the task group for allotments in Chorley.
She is also part of the Chorley Domestic Violence Forum, and sits on the Heapey and Wheelton Village Hall Committee.
Coun Peter Goldsworthy, leader of Chorley Council, said: “I was shocked to hear of the arrest.
“In view of developments, I have suspended Coun Hansford from the Chorley Conservative group of councillors and she is therefore no longer a Conservative councillor.”
Donna Hall, Chorley Council’s chief executive added: “Coun Hansford will remain as a councillor of the borough unless she chooses to resign.”
If the mum-of-two did resign, a by-election would have to be called as her seat is not up for re-election until 2014.
A spokesman for Lancashire Police said: “We can confirm that a 38-year-old woman from Brinscall has been arrested on suspicion of fraud by false representation.”