The top fundraiser for British Prime Minister Tony Blair's Labour Party was arrested this evening on suspicion of conspiracy to pervert the course of justice, a police source said.
Labour fundraiser Lord Michael Levy was arrested when he returned to a London police station for a bail hearing in connection with alleged offences in a loans-for-favours scandal following his first arrest last year.
Lord Levy, Mr Blair's personal Middle East envoy, denied any wrongdoing. "Lord Levy went to the police station today as asked," a spokesman for Lord Levy said in a statement.
"He was interviewed again. He completely denies any allegations of wrongdoing whatsoever. He left the police station in the early afternoon and since there is a continuing investigation he will not make any further comments at this time."
Police said in a statement a man had been arrested and bailed pending further inquiries.
Lord Levy was first arrested in July 2006 as part of a police investigation into a long-simmering party funding scandal that has hurt Mr Blair amid a series of sleaze and mismanagement allegations surrounding members of his cabinet.
In December 2005, Mr Blair himself became the first prime minister since David Lloyd George in the 1920s to be interviewed by police in a cash-for-honours probe.
Police are investigating allegations that the Labour Party promised Lordships - state honours which come with life-long seats in the House of Lords (the upper house of parliament) - in return for loans to help a 2005 general election campaign.
No one at Mr Blair's office was immediately available for comment.
Agencies