Lord Levy's £6,000 farewell party

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The reception is being held to mark Lord Levy's nine years of service as Tony Blair's personal envoy in the Middle East.

It is to be hosted by Foreign Secretary Margaret Beckett at opulent Lancaster House in Central London next Tuesday.

In a written Parliamentary answer, Foreign Office Minister Geoff Hoon said: "The estimated cost is £6,000, which will be met by the Foreign Secretary's entertainment budget."

The timing of the event will raise eyebrows, coming as Lord Levy, 61, remains on police bail after being arrested over claims that honours were traded for cash.

The former pop music tycoon was arrested and questioned in the probe, which was initially into the sale of honours but later broadened to investigate any cover-up attempt.

Lord Levy - known as "Lord Cashpoint" for his ability to raise millions for Labour - was rebailed last week.

He has denied all accusations of wrongdoing in the honours affair and claimed that he is facing a prejudiced, "mediastyle trial".

Liberal Democrat Treasury spokesman Lord Oakeshott said: "Why should the taxpayer put his card behind the bar for Lord Levy's leaving party?

"He's the Prime Minister's personal envoy - if he deserves a lavish send-off, the Prime Minister should have the decency to do it personally rather than expecting the Foreign Office to fund it.

"Perhaps the Prime Minister is too embarrassed to host it himself."