A SCANDAL engulfing a Queensland MP has widened with allegations he approached a supermarket giant for money to support a lobby group he was involved in while serving as an MP.

The LNP on Monday suspended Redcliffe MP Scott Driscoll from the party until several investigations into his role with a community association and a retailers group were completed.

Mr Driscoll is accused of heading the Regional Community Association of Moreton Bay, which paid out $120,000 to his wife's company for consultancy work.

The MP is also alleged to have used taxpayer-funded staff in his electorate office to conduct business for the Queensland Retail Traders and Shopkeepers Association.

He has denied the allegations and claimed the electoral staff were actually setting up a community hub for local services.

News Limited reported on Tuesday Mr Driscoll last year approached Woolworths, acting on behalf of the Queensland Retail Traders and Shopkeepers Association, for funding.

It was reported the funding would result in a change in the group's opposition to major supermarkets extending trading hours.

Woolworths confirmed it rejected the proposal.

A day after asking for Mr Driscoll's suspension, Premier Campbell Newman said he knew nothing about the Woolworths allegation.

"It's very important anyone who has an allegation, a concern, and a gripe or anything should come forward," he told ABC Radio."I know nothing about today's allegations at all."

Queensland Health is one of several agencies investigating the Driscoll matter, specifically funding directed to the RCAMB and the "appropriateness" of it.

Health Minister Lawrence Springborg said on Tuesday his department acted immediately when a complaint was received.He also stood by his party leader's decision.

"I support very much what has actually happened in regards to Mr Driscoll and we will see what the various investigations actually uncover in that area," he said.

But Opposition leader Annastacia Palaszczuk said it was not good enough for the Premier to claim no knowledge of the most recent allegation.

"If small retail operators have been sold out by their peak group seeking cash to change its policy in favour of the big players, then that is a problem that leads directly to the Premier's desk if he is fair dinkum about fostering small business," she said.

"At the time the Premier said he was 'surprised' by the change of heart. But has he done anything to find out the motives of the retailers' group management and whether it received payment from any large chain retailers?"