Downing Street conceded staff “gathered briefly” in the Cabinet Room following a meeting to wish the Prime Minister Happy Birthday.
It was alleged 30 people attended and shared cake despite social mixing indoors being banned.
ITV News reported the Prime Minister’s wife, Carrie Johnson, had organised the surprise get-together complete with a chorus of “happy birthday” on the afternoon of June 19 2020.
Interior designer Lulu Lytle admitted attending but insisted she was only present “briefly” while waiting to talk to Mr Johnson about the lavish refurbishments she was carrying out to the couple’s flat above No 11.
A Downing Street spokeswoman 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 10 minutes.”
ITV news also reported later that evening family friends were hosted upstairs to further celebrate the Prime Minister’s 56th birthday in his official residence.
No 10 said: “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.”
The allegations capped another torrid day for Mr Johnson after Lord Agnew dramatically resigned as a minister at the despatch box over the “schoolboy” handling of fraudulent Covid business loans.
Mr Johnson was earlier forced to launch a Cabinet Office investigation into Tory MP Nusrat Ghani’s allegation that a Government whip linked her “Muslimness” to her sacking as a minister in 2020.
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.
Soane Britain, the luxury designer co-founded by Ms Lytle, said she was in Downing Street that day “working on the refurbishment”, which has been subject to multiple investigations over its funding.
“Lulu was not invited to any birthday celebrations for the Prime Minister as a guest,” the spokeswoman said.
“Lulu entered the Cabinet Room briefly as requested, while waiting to speak with the Prime Minister.”
Chancellor Rishi Sunak was understood to have briefly attended as the gathering was breaking up as he entered the room to attend a Covid strategy meeting.
Sue Gray was understood to have already been aware of the birthday party allegations and therefore their emergence will not further delay the publication of her inquiry, which is still expected this week.
The senior civil servant has been investigating a series of claims of rule-breaking parties in No 10 as Mr Johnson faces calls to resign as Prime Minister, including from some of his own Conservative MPs.
Earlier on June 19 2020, Mr Johnson visited a school in Hertfordshire where pupils sang him happy birthday as he posed socially distanced with them.
ITV News reported that picnic food from M&S was eaten during the afternoon gathering starting just after 2pm and lasting for up to 30 minutes, while Mrs Johnson and Ms Lytle presented the PM with a cake.