New Labour donations allegations

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The Guardian newspaper said "middle-ranking officials" sought approval from lawyers and senior colleagues for covenants used by David Abrahams to conceal his identity.

Scotland Yard is investigating how the property developer was able to channel hundreds of thousands of pounds through third parties to keep his name from regulators.

Mr Abrahams suggested at the weekend that about 10 party figures were aware of the practice - renewing speculation about who knew within Labour.

His spokesman had no comment on Wednesday night on the latest allegations.

Labour general secretary Peter Watt quit last week after admitting he was aware of the system being used - but insisted he believed it did not breach funding laws.

The Guardian - citing "sources close to the party" - said the covenants were designed to ensure Mr Abrahams' associates had to pass the money to Labour and that they would be tax-exempt "gifts".

Lord Triesman, who was general secretary until December 2003, has said he was "completely unaware" of what was being done and would have stopped it immediately if he had been informed.

A Labour party spokesman said: "We cannot comment on this because of the ongoing police and internal investigations into the matter. This will all be examined during the inquiry."

Prime Minister Gordon Brown has denied any knowledge of the use of proxies and launched an internal inquiry into why the £650,000 of donations were "not lawfully declared".