Straw attacked over funding reforms

And Conservatives said he had adopted a "partisan" approach to cleaning up political funding by proposing changes to spending rules that will hit them particularly hard.

The Justice Secretary told MPs that imposing a cap on donations in return for increased state funding of political parties would not be possible without the support of the public - as well as agreement from all main parties - which he admitted the Government did not have.

Legislation will instead be brought forward to end the electoral spending "arms race" by imposing additional limits on campaign expenditure, and the Electoral Commission watchdog will be given tougher powers to clamp down on abuses, said Mr Straw.

Mr Straw published a White Paper on party finance and expenditure ahead of a Bill which is due to be tabled before the summer recess but will not pass through Parliament until next year.

The Paper sets out proposals for a possible reduction in the limit on a party's national spending on a General Election below the current level of almost £20 million - possibly to £15 million - and changes in the type of expenses which qualify.

And it proposes to extend limits on campaign spending beyond the period immediately before an election, suggesting that an annual cap on expenditure could be imposed. This would primarily affect the Conservatives' tactic of directing cash from donors like Lord Ashcroft at target seats throughout the period between elections.

A review of party funding carried out by former Whitehall mandarin Sir Hayden Phillips in the wake of a string of scandals over donations suggested a £50,000 cap on gifts from individuals and organisations.

But all-party talks on the Phillips proposals foundered last year after Conservatives walked out because of Labour's refusal to accept that this limit should be applied to donations from trade unions.

The White Paper suggested that the Government would like to see any cap set at a "significantly lower limit", but accepted that no consensus was likely to be reached soon either on donation limits or on the extra state funding which the parties say they would need to make up for the loss of cash which would result.