Obama refuses £40million in public election funds ... so he can raise even MORE money from private donors

The Democrat nominee said he was opting out of America’s public financing system and relying on the record-breaking funds he has raised over the Internet.

Money matters: Barack Obama steps out of his Secret Service vehicle Washington DC

His announcement brought an angry response from Republican rival John McCain,  who accused Mr Obama of hypocrisy for reneging on an earlier pledge to take  government money.

Under the system created in 1976 to prevent the kind of abuses exposed by  Watergate in Richard Nixon’s presidency, each candidate is offered £42 million by the treasury.

If they take it, they are barred from  accepting private donations or spending any more campaign cash.

By declining the federal money, the 46-year-old Illinois senator risks tarnishing his image as a candidate who would not rely on funding from lobbyists and special interest groups.

But accepting public funds would have meant surrendering his huge financial  advantage.

Mr Obama has already raised twice as much as his 71-year-old opponent and  Democrat analysts believe he could pull in as much as £250 million to  fight the November election.

Most of the £135 million he has tallied so far has come in small  amounts of just a few pounds at a time donated over the Internet.

Mr McCain claimed his opponent ‘has revealed himself to be just another typical  politician who will do and say whatever is most expedient for Barrack Obama.

‘The true test of a candidate for president is whether he will stand on  principle and keep his word to the American people.

Barack Obama has failed  that test today,’ he added.

In a video message announcing the move to supporters, Mr Obama said: ‘It’s not  an easy decision, and especially because I support a robust system of public financing of elections.

‘But the public financing of presidential elections as it exists today is  broken, and we face opponents who’ve become masters at gaming this broken  system.’

He was referring to a loophole Republicans could use to overturn his financial  advantage if both candidates embraced the public finance system.

The Republican National Committee has far more in the bank that its Democrat  counterpart. 

‘While candidates accepting government cash are barred from spending their own  campaign funds, the national committee can keep raising money,’ said one  Washington analyst.

‘That means John McCain would probably end up with more money to spend than Barack Obama.’

The new twist in the White House race came as Mr Obama tried to boost his  leadership credentials by saying that he would try to bring Osama bin Laden to justice without making him a martyr.

Although he wouldn’t say how he would deal with the elusive al Qaeda terror  boss, he praised the post war Nuremburg prosecution of Nazi leaders as an ‘inspiration.’