Sinn Féin senator Elisha McCallion and two party officials have resigned after £10,000 Covid relief grants were paid into three party accounts.

Party leader Mary Lou McDonald said that the leadership had established earlier this week that "three party offices incorrectly received money under the Small Business Grant scheme in the north".

A total of £30,000 was wrongly paid into Sinn Féin accounts in three separate tranches.

Ms McCallion is a former MP for Foyle but was elected as a senator in the Republic in April. A by-election for her seat will now be called.

"Last night I accepted the resignations of the three individuals responsible for these accounts and for not returning the money - Senator Elisha McCallion, the Chair of Upper Bann Comhairle Ceantair and a party official in West Tyrone," Ms McDonald said. 

READ MORE: Pressure on Sinn Féin to explain apparent delay in returning Covid money meant for businesses

"The failure to immediately return grants erroneously paid into Sinn Féin accounts is a most serious situation. 

"As party leader I wish to acknowledge and apologise for these failures."

Ms McDonald said the three payments were "paid into constituency accounts in West Tyrone and Lurgan, and into Elisha McCallion’s account in respect of her former Westminster office".

“In each case the grant money has been returned in full, with repayments made on Monday and Tuesday of this week," she said.

“These monies should have been returned immediately as no political offices qualified for this grant. The fact that this did not happen is unacceptable."

Speaking this afternoon at Stormont, Sinn Féin's leader in the north Michelle O'Neill said that the decision not to return the Covid-19 relief funds was "wrong" and that it should not have happened.

"We have been very clear in saying it was totally unacceptable," Ms O'Neill said.

In a statement, Ms McCallion said: "Earlier this year a Small Business Grant was lodged into a joint account of which I am a named signature with my husband.  

"I did not apply for nor solicit this money, nor did I receive any correspondence from the department in relation to it.

"I fully accept that as a named signature on the account that I should have taken extra steps to verify this situation, before it was brought to my attention on Tuesday.

"The money was repaid in full on Tuesday.

"I apologise unreservedly for the poor judgement I showed in relation to this and therefore, last night I spoke to the party leader and tendered my resignation as a member of Seanad Éireann with immediate effect."

The BBC reported that West Tyrone MLA and Stormont finance committee member Maolíosa McHugh confirmed his office received the grant, saying he had contacted party officials to make arrangements to pay the money back "quite a while ago".

The three £10,000 payments were among 452 totalling more than £4.5 million made by the Department for the Economy to those who may not have been eligible for the emergency funding.

Meanwhile, the DUP is investigating whether a landlord it rents a constituency office from may have received Covid relief cash meant for struggling businesses.

DUP MLA Gary Middleton has demanded answers from Sinn Féin, and in turn said he wants to be open and honest about his party.

"When I demand honesty of others, I think it is important that we be honest ourselves, and it's my understanding there may be a case of one elected representative who received no payment, but their landlord received the payment, the £10,000 grant," he told the BBC.

"Where that has happened, absolutely the money should be paid back where the person was not eligible."

DUP leader Arlene Foster said this afternoon that no DUP member has received the grant, adding the party made sure that none of the party offices received the grant.

"If a landlord received money that it shouldn't have, then it should be returned, and if it hasn't the Department of Finance should pursue that money," Mrs Foster added.

She said the scheme was designed that it would not benefit politicians.

"It has to be paid back because it is public money," Mrs Foster added.

"It was put in place to help businesses that were struggling at that time, so there is no way politicians or landlords should have been in receipt of that money.

"They have a moral and legal duty to pay that money back."