ITV News reported that the party was held during the afternoon of June 19, 2020, when the public were banned from holding social gatherings indoors, due to Covid restrictions.
Johnson’s wife, Carrie Johnson, is said to have played a part in organising the get-together.
Interior designer Lulu Lytle, who was carrying out lavish and controversial work to the Johnson’s flat above No 11 Downing Street, admitted attending but insisted she was only present "briefly" while waiting to talk to Mr Johnson.
Martin Reynolds, Mr Johnson's under-fire principal private secretary, was also said to have attended.
ITV News said that picnic food from M&S was eaten during the afternoon gathering lasting for up to 30 minutes, while Mrs Johnson and Ms Lytle presented the PM with a cake.
Downing Street has disputed the report. A spokeswoman for No10 said: "A group of staff working in No 10 that day gathered briefly in the Cabinet Room after a meeting to wish the Prime Minister a happy birthday. He was there for less than ten minutes."
ITV News also reported that family friends were hosted in Downing Street on the evening of 19 June 2020, in another potential breach of Covid rules. However, Number 10 have denied this, with a spokesperson saying: "This is totally untrue. In line with the rules at the time, the Prime Minister hosted a small number of family members outside that evening.”
A spokeswoman for Soane Britain, the luxury designer co-founded by Ms Lytle, said: "Lulu was present in Downing Street on June 19 working on the refurbishment.
"Lulu was not invited to any birthday celebrations for the Prime Minister as a guest.
"Lulu entered the Cabinet Room briefly as requested, while waiting to speak with the Prime Minister."
Sir Keir Starmer said the latest revelations were "yet more evidence that we have got a Prime Minister who believes that the rules that he made don't apply to him".
"The Prime Minister is a national distraction and he's got to go," the Labour leader added.
Senior civil servant Sue Gray is currently working on her inquiry into a series of claims of rule-breaking parties in No 10. It is understood that she was already aware of the birthday party allegations, and therefore their emergence will not further delay the publication of her investigation, which is expected this week.
Earlier on June 19 2020, Mr Johnson visited a school in Hertfordshire where pupils they sang him happy birthday as he posed socially distanced with them.
Social gatherings indoors were forbidden under lockdown laws at the time, with a relaxation of the regulations permitting gatherings of up to six people to take place outside.
Around 17 allegations of rule-breaking events have now been levelled across Downing Street, wider Government and the Tory party.
Mr Johnson has faced calls to resign as Prime Minister, including from some of his own Conservative MPs.
Jo Goodman, the co-founder of Covid-19 Bereaved Families for Justice campaign, said she remembers June 19 "vividly", with it being the day before what would have been her father's 73rd birthday, had he not died with coronavirus.
"It was a horrible time for my family, but we stuck to the rules, not even being able to hug to comfort each other," she said.
"It's completely sickening that the Prime Minister spent the evening sharing cake with 30 friends indoors and though we're not even surprised any more, it still brings fresh pain. Whilst dozens sang happy birthday to him, families couldn't even sing in memory at their loved ones funerals.
"Regardless of any report, the Prime Minister clearly needs to resign. He's lost all credibility."
Culture Secretary Nadine Dorries, a staunch ally of Mr Johnson, questioned whether the gathering would have broken the rules in place at the time.
"So, when people in an office buy a cake in the middle of the afternoon for someone else they are working in the office with and stop for ten minutes to sing happy birthday and then go back to their desks, this is now called a party?" she tweeted.
A spokeswoman for Mrs Johnson declined to comment.
Former Tory party chair Baroness Warsi told Channel 4 News: "Anybody who was at a party where rules were broken, whether that's the Prime Minister, ministers, special advisers, or civil servants, should resign.
"If you are in a place which makes the rules and you are seen not to be following those rules, then you should fall on your sword."
Leader of the Liberal Democrats Sir Ed Davey called for the Metropolitan Police to investigate the latest allegations to "deliver justice for millions who sacrificed so much during this pandemic".
Scotland Yard reiterated its previous statement, saying if Ms Gray's inquiry finds evidence of a potential criminal offence then officers will make a "further consideration" on whether to investigate.
In response to the allegations, an old tweet from 2020 has resurfaced – in which the Prime Minister encouraged the public to follow the example of a seven-year-old who stayed at home on her birthday.
"Josephine sets a great example to us all by postponing her birthday party until we have sent coronavirus packing," the PM tweeted in March 2020.
"Together we can beat this. In the meantime let's all wish her happy birthday (twice) whilst washing our hands. #BeLikeJosephine #StayHomeSaveLives".