Brown may be forced out before next election, says Labour peer

Lord Desai attacked the Prime Minister, saying the "smeargate" scandal, in which Mr Brown's aide Damian McBride sent an email proposing the use of lurid and unfounded stories against senior Tories, severely damaged him.

Writing in the Evening Standard, the peer said: "Gordon Brown's moral mask has been ripped off.

"His reputation for sound economics was destroyed even before the recession; McBride has destroyed his claim to sound politics."

If Labour suffers big losses, the party would have little time to choose a new leader through the usual procedures. Lord Desai even said the Liberal Democrats could overtake Labour, as Treasury spokesman, Vince Cable, "looked good" during the economic crisis.

"This may be the last Budget of this Government if Labour soldiers on with Brown; if they change horses they may live to fight another day," he said.

The Children's Secretary Ed Balls and Labour's general secretary Ray Collins had to deny allegations over the weekend as the "smeargate" furore continued.

Mr Balls was accused of holding weekly Downing Street meetings to advance his ambitions, while Mr Collins was faced with a report suggesting that he helped set up the Red Rag gossip website.

Difficulties for Labour also grew when the candidate selection for Erith and Thamesmead was called off after a ballot box was tampered with, amid suggestions that Georgia Gould, 22, daughter of polling guru Lord Gould, was being parachuted into the seat.