Fundraiser: I knew about donations

In a statement, Jon Mendelsohn said he learnt of the arrangement soon after being appointed in September and had been "unhappy" with it.

He wrote to donor David Abrahams with a view to informing him that donations through intermediaries "would not play a part in our future plans".

"I was very concerned that these arrangements did not meet the strict transparency test that I wished to see in place," Mr Mendelsohn said.

"I did not discuss this with the officers of the National Executive Committee or party leadership but I decided to tell Mr Abrahams that his method of contribution was unacceptable. I had no intention of asking Mr Abrahams for donations and wanted to give him the courtesy of explaining this personally."

The statement was released just moments before Gordon Brown was due to face a torrid Prime Minister's Questions in the Commons.

On Tuesday night Mr Abrahams revealed that he had received a letter from Mr Mendelsohn describing him as one of the party's "strongest supporters", and asking for a meeting to discuss allocation of "resources".

On Wednesday Mr Mendelsohn insisted he had raised the issue of disguised donations with the then Labour general secretary Peter Watt, who had informed him it was a "long-standing" arrangement and was within the law.

"I was informed by Peter Watt, to whom I reported, that this was an arrangement with David Abrahams which was long-standing and which was appropriately dealt with in relation to the party's reporting requirements. He told me these donations fully complied with the law and I had no reason to doubt that information.

"However, I was unhappy with the arrangement whereby donations were taken through a third party and was determined it would not play a part in our future plans. I was very concerned that these arrangements did not meet the strict transparency test that I wished to see in place."