Prime Minister Stephen Harper has brushed aside scathing criticism about former cabinet minister Peter Penashue, calling him the best MP Labrador has ever had.

NDP Leader Tom Mulcair and interim Liberal Leader Bob Rae both pushed Harper on the Penashue affair in the House of Commons on Tuesday, particularly over Harper's decision to let Penashue run in a forthcoming byelection.

Peter Penashue resigned as the MP for Labrador and as Canada's minister of intergovernmental affairs last week. (CBC)

"Peter Penashue has finally resigned after breaking the law," Mulcair told the Commons, referring to Penashue's resignation last week after Elections Canada found Penashue's campaign had taken in 28 different ineligible donations.

"If he did something wrong, why is the prime minister allowing him to run again?" Mulcair asked.

"Will the prime minister commit right now to allow Elections Canada to conclude its investigation before calling the byelection in Labrador, or is it that he is afraid of what illegal activities might come to light?"

Harper lauded Penashue, a former Innu Nation leader who defeated a Liberal incumbent by just 79 votes in the 2011 election, as someone who accomplished much in a short time. Penashue had served in cabinet as the minister of intergovernmental affairs, and was Newfoundland and Labrador's cabinet representative.

"Minister Penashue has done the right thing under difficult circumstances, and he is prepared to take his record and be accountable to the people of Labrador — everything from defending the seal hunt to promoting the Lower Churchill project," Harper told the House.

"This is the best member of Parliament Labrador has ever had."

Harper repeated the themes during subsequent questioning from Rae.

"The difficult circumstances that Mr. Penashue found himself in involved buying an election, paying back $47,000 to Elections Canada," Rae said.

"Could the prime minister please tell us, when do his standards start taking effect? When does he start applying these standards to his own members and to his own party? When is that going to start to happen?"

Harper replied, "It is the people of Labrador who will make the decision on this matter. Minister Penashue will be accountable to the people of Labrador. Unlike the Liberal Party in Labrador, minister Penashue will be fighting for the Lower Churchill hydro project."

Later, Harper said Penashue will stand on his record during a byelection, the date of which could be called within two weeks.

"In our democratic system, voters are the ones who make the decision in such a situation," Harper said. "I am convinced that minister Penashue is the best member of Parliament that this riding has ever had."

Although the byelection has not been formally called, Penashue has already started work on a re-election campaign. Indeed, Penashue set up the website for the campaign before he announced his resignation.