The probe centres around a decision by an Ashfield District Council officer to go against a cabinet recommendation and sell off 37 dwellings on Clare Road for £800,000 to the Pentland Property Company in October 2007 during a public auction.

Council leaders voted to demolish the housing stock and sell off just the land, rather than both the land and properties, during a cabinet meeting in April 2007.

The sale, which netted the council a capital receipt of £430,000, contravened the authority's code of procedures relating to the disposal of land and buildings.

A report by an independent London lawyer investigating the sale for Ashfield District Council has now declared the sale to be void.

And it has emerged that council chiefs have since voted to retrospectively approve the sale to the Pentland Property Company.

A council insider told Chad: "When an officer is doing something like this it raises a lot of questions that need to be answered. This could be a case of gross misconduct and a sackable offence.

"The fact that money was made from the sale is irrelevant because this was an illegal action. Money may now have to be spent making this sale legal and money has already been spent on a lawyer's fee.

"This situation really is quite disgraceful. The officers went against the cabinet's recommendations and you just don't do that. The officer concerned was one with a lot of experience and should have known better.

"Things need to be looked at to check that officers are doing what they are supposed to be doing. Maybe safety nets need to be brought in in the future."

Council leader Jason Zadrozny told Chad the sale had been an innocent mistake and the correct safeguards were now in place.

"This sale did make good financial sense, but we did not do it in the right way. As soon as we realised that a mistake had been made we reported ourselves.

"This was an error of judgment, but one that was made with good intentions. The rules were not broken and I am confident that the correct procedures are in place so that this cannot happen in the future.

"We did not know which safeguards were in place and were not in place when we took over this council and this has been a good learning curve for us. This is something that will not happen again."