Cash for honours and No10's deleted e-mails

They have unearthed potentially vital evidence that key figures close to Tony Blair openly discussed the possibility of Labour donors being rewarded with peerages.

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Many of the e-mails were not voluntarily disclosed and may have been deliberately concealed, police sources say.

These internal communications are key to the file submitted to the Crown Prosecution Service, which will make the final decision on whether to bring formal charges.

The Daily Mail can reveal that detectives are now increasingly confident that the ten-month investigation will end in a criminal court case - either over claims that peerages were traded for political donations, or an attempt to conceal evidence.

Speculation was mounting that Downing Street 'gatekeeper' Ruth Turner, arrested in a dawn raid at her home last week on suspicion of perverting the course of justice, features heavily in the cover-up allegations.

A decision on whether to charge her will be made within a few weeks.

Insiders believe Mr Blair's position would become untenable if Miss Turner, Director of Government Relations and one of his closest aides, were to be charged with any criminal offence in connection with the cash-for-honours inquiry.

The 36-year-old - the first paid Government official to be arrested - is due to answer police bail next month.

In a further twist, it was claimed that detectives have uncovered a 'hidden' computer network in Number 10 from which crucial e-mails appeared to have been deleted.

Downing Street and senior prosecution sources issued a swift denial of the allegations made by ITV News, which claimed the existence of a second information technology system in the building was revealed to police by a witness over recent weeks.

However, they did not deny that members of the Downing Street team may have had more than one e-mail address, enabling them to send sensitive memos more securely.

ITV also alleged that officers discovered emails last autumn which were apparently exchanged between Labour fund-raiser Lord Levy, Miss Turner and Mr Blair's chief of staff Jonathan Powell.

They were said to be ' indiscreet' and referred directly to 'Ks and Ps' being offered to those who have donated money.

The suggestion was that K could stand for knighthood and P for peerage. Scottish Nationalist MP Angus MacNeil, whose original complaint prompted the police investigation, said the latest claims would create 'tremors' in the heart of Government.

CPS sources have revealed that Scotland Yard made its 'significant' breakthrough after the hard drives of Downing Street computers were examined by police IT experts.

Over several months, every piece of e-mail traffic - including deleted and saved messages -has been checked for 'smoking gun' evidence.

The private e-mail accounts of various officials have also been scrutinised.

Although police are said to be 'bullish' about their inquiry, officers accept that the final decision on whether to bring charges will be taken by the Crown Prosecution Service.

So far, four people have been arrested over the inquiry. They are Miss Turner, Lord Levy, major Labour donor Sir Christopher Evans and headteacher Des Smith.

A final report on the case is now unlikely to be submitted to the CPS until early spring.

It remains possible that Mr Blair could have stepped down as PM by the time prosecutors have reached a decision.

CPS lawyer Carmen Dowd, head of its Special Crime section, will make the final decision.

She is being advised by former Senior Treasury Counsel David Perry QC, a deputy High Court judge.

Her boss, Director of Public Prosecutions Sir Ken Macdonald QC, has excluded himself from the case because he is an ex-colleague of Cherie Blair.

Earlier this week, the Mail revealed that Scotland Yard detectives are closing in on a 'Gang of Four' suspects - including Mr Blair -at the heart of the cash-for-honours affair.

The Prime Minister, Mr Powell, Lord Levy and Miss Turner are now the main focus of the police probe.

Every suspect interviewed by police has firmly denied any wrongdoing and nobody has yet been charged.