The Tory peer, 51, is at the centre of storm over her alleged links to a firm awarded a PPE contracts worth more than £200million .
PPE Medro struck a deal to make surgical gowns and masks during the pandemic after she reportedly recommended the firm to ministers through a “VIP lane” system.
Baroness Mone has faced accusations of profiting from the business, but she has long denied any involvement or connection with the firm.
A spokesman for Baroness Mone said on Tuesday: “With immediate effect, Baroness Mone will be taking a leave of absence from the House of Lords in order to clear her name of the allegations that have been unjustly levelled against her.”
The leave of absence means Lady Mone, who founded lingerie company Ultimo, will not attend sittings of the House, vote on any proceedings and will not be able to claim an allowance.
It comes after Matt Hancock accused her of being aggressive and threatening when trying to secure a government Covid deal for a firm.
The former Health Secretary claimed she asked for help to secure contracts in an email in June 2021.
In his book, Pandemic Diaries, which is being serialised in the Daily Mail, Mr Hancock claimed the Scottish businesswoman had demanded his “urgent help” with a company, which he has not named and is understood not to be PPE Medro.
In an entry dated June 18 2021, he wrote: “Baroness Michelle Mone has sent me an extraordinarily aggressive email complaining that a company she’s helping isn’t getting the multi-million-pound contracts it deserves.
“She claims the firm, which makes lateral flow test kits, ‘has had a dreadful time’ trying to cut through red tape and demanded my ‘urgent help’ before it all comes out in the media.
“‘I am going to blow this all wide open,’ she threatened.'”
“By the end of the message, she seemed to have worked herself into a complete frenzy and was throwing around wild accusations.”
Baroness Mone was made a Tory life peer in 2015.
Labour has tabled a motion aimed at forcing ministers to publish details of the contracts allegedly linked to her.
Labour’s deputy leader Angela Rayner accused Conservative party members of using the pandemic as an “opportunity” to “get rich”.
She said: “This looks very dodgy. People making huge sums of money on PPE that couldn’t be used.
“It needs to be exposed now. Those documents need to come out and it needs to be out in the open.”