In his motion, Cllr Walsh asked for a “full review by the Corporate Scrutiny Committee of all relevant documents relating to these allegations”.
Cllr Walsh says he was told by acting chief executive Ged Rowney, that the motion could not be used because it was defamatory.
A spokesman for Bolton Council reiterated this and said the Asons scandal has already been “fully investigated”.
The Conservative motion includes a comment posted on The Bolton News website, which named a number of council staff and made allegations about the actions of Bolton Council in the lead up to £300,000 being paid to Asons under emergency powers.
Cllr Walsh’s motion included the whistleblower’s allegations in full but he said it was never his intention to defame anyone.
He said: “I was merely repeating and not supporting or agreeing. The public deserves a thorough investigation.”
Conservative group leader Cllr David Greenhalgh said: “When serious allegations of this kind are made in the public domain, as these were, councillors have a corporate responsibility to investigate them further, as we would do with any other such whistleblowing.
“The Labour council has taken a very serious and dangerous step in denying, not just any investigation, but also any debate, fuelling yet more controversy over the whole Asons decision, the resignation of the former chief executive, and the whole culture that existed around decision making at the council.
“If the Labour council knows these allegations to be false, they should be stating that publicly, not brushing the issue under the carpet by refusing to accept this motion.
“They should be defending those officers named in the comment; that is how you support your staff, not allowing accusations and rumours to run rife.
“The council and Labour leadership already admits that ‘mistakes were made’, but if any of the allegations of this whistleblower, who claims to speak as a former employee of the council, are to believed, then Labour should step up to the plate, do the right thing and have the alleged illegal activity investigated, not draw a line under the whole Asons saga, as they are clearly trying to do.”
A council spokesman said: “The decision to award the grant has already been fully investigated and it has been repaid in full.
“The motion was not accepted because it included a defamatory comment posted anonymously on The Bolton News website, which they also deleted.
“This was explained to councillors and we received no further requests to amend the motion.
“A reworded motion was not put forward and if it had, it would have been considered.”
In 2016/17 external auditors reviewed the Asons grant and found it was legal but made recommendations about the council’s use of emergency powers.