BBC chairman Richard Sharp is facing calls to quit after MPs found he made "significant errors of judgment" by acting as a go-between for a loan guarantee for Boris Johnson.
A cross-party committee was furious that Mr Sharp failed to declare to MPs his role in facilitating the arrangement when he was applying for the job of BBC chairman.
The committee said he should "consider the impact his omissions will have" on trust in the media organisation.
It said his actions "constitute a breach of the standards expected of individuals" applying for prominent public appointments.
Mr Sharp did not arrange the loan but admitted introducing his friend Sam Blyth, a cousin of Mr Johnson who wanted to help the then-prime minister with his financial troubles, to the Cabinet Office.
A spokesman for Mr Sharp said he "regrets" not telling MPs about his involvement with Mr Blyth "and apologises".
But Labour and SNP politicians suggested Mr Sharp's position was untenable, while a Government minister said it was up to the BBC to decide on his fate.
Mr Sharp was named as the preferred candidate for the BBC job in January 2021.
The Commons Digital, Culture, Media and Sport Committee backed his appointment, but crucially it was not aware of his role in facilitating the £800,000 loan guarantee.
In a strongly-worded report it has now suggested Mr Sharp's failure to come clean could damage the BBC.
"Richard Sharp's decisions, firstly to become involved in the facilitation of a loan to the then-prime minister while at the same time applying for a job that was in that same person's gift, and then to fail to disclose this material relationship, were significant errors of judgment, which undermine confidence in the public appointments process and could deter qualified individuals from applying for such posts," the MPs said.
The committee concluded: "Mr Sharp should consider the impact his omissions will have on trust in him, the BBC and the public appointments process."
SNP MP John Nicolson, who sits on the Commons committee, said Mr Sharp's position is now "extremely difficult".
He told BBC's Sunday With Laura Kuenssberg: "He has lost the trust of the BBC staff, that's very clear, I've been deluged with messages from BBC staff saying they don't see how he can head up the BBC anymore."
He said the situation was "all a bit banana republic".
Shadow Cabinet minister Lisa Nandy said Mr Sharp's position was "increasingly untenable".
The shadow levelling up secretary told Sky News: "It's becoming more and more difficult to see how Richard Sharp can continue in that role."
Government minister Andrew Mitchell said the BBC board would have to take a view once another investigation, ordered by the Commissioner for Public Appointments, has been concluded.
"We need to be fair to all parties in this, including Richard Sharp," he told the BBC.
Put to him that it was a decision for the Government, not the BBC, Mr Mitchell said: "The BBC is not a silent part of all of this, the board of the BBC will need to consider what he's said and reach their own conclusions.
"I think the government will react appropriately to that."
