Congresswoman Maxine Waters is the first US politician to say on the record that the document, which alleges the Russian state has compromising sexual and financial information on the President, is genuine.
“We already know about the part about the coverage they have on him with sex actions is supposed to be true,” Ms Walters told US broadcaster, MSNBC. “They have said that’s absolutely true, some other things they kind of allude to.”
She did not provide evidence to back up her claim or reveal who had said it was "absolutely true".
Pressed for more information, she said: “You understand that I am saying the investigations must be done, the drilling down must be done. We must get to the facts of what it has been about.”
If the dossier was ever substantiated, she said that Mr Trump should then be impeached.
“I don’t think you can do the impeachment just because I think or others think," she said. "But I think if we do the investigations, that we will find the connections and I do think that impeachment will be necessary.”
Ms Waters' office later claimed she had not intended to suggest the dossier had been verified.
“She wasn’t talking about anything that’s not already in the public domain,” an aide said.
Ms Waters was referring to unsubstantiated allegations in the dossier compiled by a former British spy Christopher Steele.
It alleged that the Russian intelligence service, the FSB had videos and recordings of Mr Trump in a Moscow hotel with prostitutes – material that could be used to carry out blackmail.
Never intended for publication, it was compiled as oppositional research, first on behalf of Mr Trump's rivals for the Republican presidential candidacy and later for the Democrats.
But prior to President Trump being sworn in, the BuzzFeed decided to publish it in January, although it admitted it had not been able to verify its contents.
However, it claimed the existence of the dossier meant there was a clear public interest in publishing.
Mr Trump denounced it as “fake news” but the FBI had attempted to make a deal witht Mr Steele, a former MI6 agent, to obtain the contents of the memo.
It has since been reported that US investigators have corroborated aspects of the dossier concerning conversations between foreign nationals.
Ms Waters is the most senior of the 12 black women in the US Congress which she was elected to in 1991. She has been a politician for more than 40 years.
A fierce critic of Mr Trump, she has previously called his friends and advisers who have ties to Russia or oil and gas interests “a bunch of scumbags”.
In February, she warned Mr Trump was “leading himself” to possible impeachment because of his alleged conflicts of interests and that he was creating “chaos and division”.
The Senate Intelligence Committee is considering requesting testimony from Mr Steels as it investigates whether Mr Trump’s associates worked with Russian hackers in attempts to influence the presidential election.