The beleaguered Transport Secretary Chris Grayling faces two investigations into the decision to give Eurotunnel £33 million to settle a lawsuit over a botched ferry contract.

MPs on the all-party public accounts committee are set to quiz the Department for Transport's most senior civil servant over the decision, which has led to calls for the minister to resign.

Meg Hillier, who chairs the committee, said MPs would want answers about the events that led to the huge payout.

She told The Times: “This was an extraordinary procurement which is now unravelling at the taxpayers’ expense.”

Meanwhile, MPs on the all-party transport select committee are also expected to summon the minister to answer questions on the settlement.

Eurotunnel had taken legal action against the government over what it said was a “secretive and flawed procurement process” over three government ferry contracts awarded for freight services in the event of a no-deal Brexit.

One of these was to Seaborne Freight, which was to have set up a ferry service from Ramsgate to Ostend to absorb pressure on other ports in the event of a no-deal Brexit scenario.

The contract was scrapped less than two months later after a string of embarrassing revelations, including that the company had no ferries and appeared to have the terms and conditions of a takeaway companty on its website.

The decision has come under fire from Conservative MP Huw Merriman.

He told Channel 4 news it was “absolutely outrageous that a company has managed to get £33m out of a £108m tender contract, effectively make 33 per cent profit, by doing absolutely nothing".

Explaining the decision on Friday, Mr Grayling said: “The agreement with Eurotunnel secures the government’s additional freight capacity, helping ensure that the NHS has essential medicines in the event of a no-deal Brexit."