Blair gives embattled Levy his backing

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The Prime Minister gave a message of support to his chief fundraiser who faces being questioned by police for a third time over claims that Labour gave peerages in return for secret loans.

In a further development, Scotland Yard is reportedly investigating Downing Street officials for allegedly perverting the course of justice. Police are understood to be looking into the "disappearance" of key e-mails and documents relating to the inquiry. Detectives suspect that senior Number 10 aides and Labour party officials may have withheld evidence.

The Crown Prosecution Service has advised police to look into alleged attempts to hamper the nine-month probe. Some individuals are suspected of colluding over evidence.

A CPS source told the Times: "What these people should remember is that they are not dealing with a parliamentary inquiry ... anyone failing to co-operate is participating in a criminal offence."

Mr Blair brushed aside reports of a rift between himself and his close friend Lord Levy as he met Palestinian and Israeli leaders on his tour of the Middle East.

Lord Levy was allowed to take a high-profile role in the delegation and during a press conference the Prime Minister praised his work in the region.

"He has performed an excellent job as my envoy in very difficult circumstances where we desperately wanted to make progress," said Mr Blair.

The Prime Minister's official spokesman yesterday insisted police had had the "full cooperation" of officials in their honours inquiry.