David Cameron issued a supportive statement after Sir Alex Allan, his independent adviser on ministerial interests, indicated that no action should be taken against Warsi.
But Conservative MPs suspect the prime minister may be preparing to remove Warsi as co-chair of the Conservative party after his statement made reference only to her other position as minister without portfolio. It was in this capacity that Warsi travelled to Pakistan.
Cameron, who is planning a ministerial reshuffle after the Olympics, said: "Baroness Warsi is a great asset in building our reputation overseas and representing the British government abroad in her role as minister without portfolio."
Warsi said she was pleased Allan had rejected allegations that she misused her office. In a statement she said: "I have always maintained that I have never misused my ministerial office for personal or financial gain. The allegations on this matter were untrue and unsubstantiated and I am pleased that Sir Alex Allan's report has confirmed that. The last month has been a difficult time for me and my family and I am pleased I can now move on from this period and get on with the job that I am privileged to do."
Cameron referred Warsi to Allan after she admitted she should have told officials of her relationship with Abid Hussain, a second cousin of her husband, who accompanied her on an official visit to Pakistan in July 2010. Hussain, who has a shareholding with Warsi in a restaurant supply firm Rupert's Recipes, was among a number of people of Pakistani heritage recommended by her office to help with "outreach" events during her visit.
Warsi declared her shareholding when she became a minister. In his report Allan noted that officials decided there was no need to include it in the published list of ministerial interests on the grounds that "it was considered de minimus and of no relevance to her ministerial portfolio".
The Cabinet Office was not informed of other shareholders, according to Allan, who said Hussain would still have been entitled to take part in the visit even if a full declaration had been made.
"Nonetheless she should have been more aware of the perception of a conflict of interest and the potential criticism which could arise."
Allan indicated to Cameron that Warsi should not be punished. "Any action you decide to take in the light of the facts of this case is of course a matter for you, but I record my view that the breach of the code was a minor one and that Baroness Warsi did not use her office for personal financial gain. I note that you have already accepted Baroness Warsi's apology."
Allan called for Warsi to be given greater advice on the ministerial code after she acknowledged in an interview with him that she would appreciate greater guidance on travelling with relations.
"Baroness Warsi's office was clearly stretched when it came to handling arrangements for overseas travel, especially given that her overseas visits tend to involve issues and arrangements which are out of the ordinary for regular departmental ministers," he said.
"I therefore recommend that the Cabinet Office and the Foreign Office should discuss and agree arrangements for providing advice and support to Baroness Warsi in relation to the ministerial code."
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