Up to 10 Labour figures 'knew of secret donations'

Britain's Labour Party faced fresh pressure over "secret" donations today amid claims up to 10 party figures were aware a major…

Britain's Labour Party faced fresh pressure over "secret" donations today amid claims up to 10 party figures were aware a major benefactor was using proxies to hide his identity.

A spokesman for David Abrahams - whose £650,000 of gifts to the party have sparked a police investigation - suggested the number in the know could be in double figures.

The latest allegations came as Mr Abrahams issued fresh allegations - dismissed as "fictional" - that Labour chief fundraiser Jon Mendelsohn had backed the practice.

He said he had not only told him about it at a dinner in April where Gordon Brown was the guest speaker but that Mr Mendelsohn told him it "sounds like a good idea".

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The fundraiser insists he only became aware of disguised donations when he took up his job with Labour in September and had been preparing to put a stop to them.

"This latest statement is fictional and completely untrue. I will be cooperating fully with the police in their investigation," he said.

But Mr Abrahams said: "He would be well advised now to stop damaging himself and the party's credibility. He was one of only a very few people who were aware of this method of making donations to the party."

His spokesman later said that the small number of people amounted to "about 10". The renewed row came after the Prime Minister Gordon Brown had attempted to wrest back the political initiative with a pledge to press ahead with political party funding reforms.

"The latest problems in party funding show why it is right not to delay but it is time to act," he told a meeting of the party's national policy forum. And he signalled that controversial changes to the system of trade union funding should be up for negotiation as part of proposals being drawn up by Justice Secretary Jack Straw.

"We must now complete the work of change, address the problems that still remain to be resolved, not hesitate to make the changes necessary and seek to build greater confidence in the integrity of our political system," he said.

It "beggars belief" that Mr Brown did not know about Labour's disguised donations, Tory leader David Cameron said today.

Mr Cameron demanded to know exactly who was aware of the unlawful practice but he welcomed the Prime Minister's call for party funding reforms to be agreed - but only if Labour's "almost corrupt" relationship with trade unions was changed.

Cross-party talks on party funding reforms collapsed in October amid disagreement over union funding and moves to prevent Tory donors pumping cash into marginal seats.

Mr Brown called for fresh consensus but warned he would not allow "one-party deadlock". Unions welcomed the Prime Minister's speech and said they would play a "full and active" part in the discussions but the Tories accused Mr Brown of trying to divert attention from Labour's woes.

Shadow cabinet minister Chris Grayling said Mr Brown's speech was a "pretty opportunistic attempt to erect a smokescreen around events of the past two days".

"David Cameron wrote to him in October urging major reforms to party funding and a cap on donations, Gordon Brown refused because he didn't want to give up on the multi-million pound financing from the trade unions.

"His decision to pick up the issue again today must be more than an attempt to divert attention away from party problems."

Tony Dubbins of Unite, who chairs the body which acts as a liaison between the party and affiliated unions, said: "Tulo (The Trade Union and Labour Party Liaison Organisation) welcomes the opportunity to participate in the ongoing debate on party funding, and will make representations that both recognise our historic relationships and prevent future abuses of the British political process."

Liberal Democrat acting leader Vince Cable said: "It is clear to everyone that if we are to have a fair and transparent party funding system then reform is needed urgently. Gordon Brown must now ensure that he does not lose sight of this fact in a desperate attempt to secure crude political advantage."

The Electoral Commission has handed a report into Mr Abrahams' donations to Met Temporary Commander Nigel Mawer, who will decide whether to launch a full-scale criminal investigation.