Mayor brings in police over his key aide

Mr Jasper was suspended immediately, under City Hall rules, from his post as the Mayor's equalities and policing director. He will continue to receive his £120,000-ayear salary.

It follows 10 weeks of revelations in the Evening Standard over £3.3 million paid by the Mayor's London Development Agency to organisations linked to Mr Jasper or his associates.

Despite Mr Livingstone's claims of a "full audit trail", an inquiry by the agency found large amounts of cash could not be accounted for, or had resulted in poor value for money for taxpayers.

Six organisations funded by the agency are already being investigated by the police for suspected fraud. Two addresses, in Clapham and Deptford, have been raided, but no arrests have been made.

Mr Livingstone admitted the decision to suspend Mr Jasper had been driven by his fear of losing to Tory rival Boris Johnson, whom he described as "formidable" and able to attract the "Big Brother" generation of voters.

In an interview with GMTV to be broadcast on Sunday, Mr Livingstone says: "This is bound to be a close fight. The Conservatives have found the most popular Conservative in Britain."

He said he had accepted Mr Jasper's request to refer the matters to the police in an attempt to focus the election away from a "horrendous smear campaign" and on to the "key issues" of crime, transport and climate change.

Mr Livingstone said: "Last week Lee came to me and said, 'Look, I can't do my job. This dominates everything. I'm dealing with people and they don't know whether this is true or not.'"

But the Mayor's critics accused him of mounting a stunt and "wasting police time" so he can divert questions about Mr Jasper in the run-up to the 1 May poll. Scotland Yard said it had yet to receive an official complaint as the Standard went to press this afternoon.

City Hall insiders said the Mayor had decided to "cut Mr Jasper loose", and speculated that more damaging allegations about misuse of public money may have been brought to Mr Livingstone's attention. But there was also the belief that Mr Livingstone was trying to portray himself as a "victim", and aimed to make police investigate criminal allegations never been made against Mr Jasper - so he can claim victory if an the police find no crime has been committed.

Boris Johnson said: "Only 12 hours ago, the Mayor stood by Lee Jasper and said, 'I have full confidence.' What could have changed his mind since then?

"This looks like a deliberate attempt to bury this investigation until the election. Today's announcement provides further evidence that Mayor Livingstone's City Hall is mired in maladministration."

Liberal Democrat mayoral candidate Brian Paddick, a former Met police deputy assistant commissioner, said the decision to call in the police was a "serious escalation" of the crisis.

He said: "This goes far beyond the allegations made by the Evening Standard, which from my understanding simply suggested Lee Jasper had broken the [City Hall] rules, not broken the law.

"It casts serious doubt on the Mayor's judgment in terms of his selection of advisors. It's unlikely that any of these investigations will be concluded by 1 May.

"What the voters of London have got to realise is that if they re-elect Livingstone, the chances are they're in for a nasty shock in the months following the election."

Mike Tuffrey, Liberal Democrat group leader on the London Assembly, said: "The Mayor has been adamant that Lee Jasper is innocent of all accusations. If the Mayor is certain that Lee

Jasper has not acted illegally, surely he is wasting police time with this matter."

Richard Barnes, Tory group leader on the Assembly, said: "The fact is that Mr Jasper should have been suspended months ago over these allegations."

Experts said the Mayor may have made a smart tactical move. Tony Travers, who specialises in London government, said: "This step will have the advantage for Ken Livingstone of pushing it into the long grass for the foreseeable future, and certainly until after the election."

Mr Jasper will be questioned by the London Assembly over the grants next month. It is understood he will have to attend despite his suspension, but may choose not to answer certain questions. A mayoral spokesman said "all allegations without exception" in the Standard that referred to Mr Jasper were being referred to the police.

Mr Livingstone said: "I want to make it absolutely clear that the police have made no approach to me to refer these allegations. I believe this investigation will exonerate Lee Jasper."