Hain dismisses cover-up claims

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The Work and Pensions Secretary blamed the controversy on "poor administration", dismissing any suggestion that he had tried to cover up donations to his Labour deputy leadership campaign as "absurd".

He added that his Permanent Secretary had told him there was no conflict of interest between the donations and his ministerial jobs, which also include Secretary of State for Wales.

"I am more than happy for the inquiries by the Electoral Commission and the Parliamentary Commissioner for Standards to take their course and meanwhile I will get on with my Cabinet jobs," he said in a statement.

Maintaining that all of the donations to his campaign were legitimate, Mr Hain said: "The notion that there was some attempt by me to hide anything is absurd. As with all candidates, money was raised by my campaign team. All those who contributed are people and organisations who are eligible and legally entitled to do so."

His statement came as questions mounted over a mysterious think-tank through which six donations to his deputy leadership bid were channelled.

The Progressive Policies Forum (PPF) employs no staff and has apparently not published any work since its inception in December 2006.

Mr Hain said the PPF, which provided £26,000 in donations and an interest-free £25,000 loan, had stepped in to cover overspending in the aftermath of his failed bid.

"After the campaign had finished, the extent of outstanding debt became apparent to me," he said. "I was not involved in establishing the Progressive Policies Forum but it was prepared and able to assist in making donations to the Campaign and did so.

"Of course, when I reported these late to the Electoral Commission, I provided full details. I am now making immediate arrangements to repay £25,000 of the monies raised by or through the PPF as it came in the form of an interest-free loan."