LONDON - Labour Party General Secretary Peter Watt resigned on Tuesday following the revelation that a property developer gave hundreds of thousands of pounds in donations without revealing his identity.
Watt, in charge of party finances, said he had been aware of David Abrahams' arrangement to give almost 400,000 pounds in donations to Labour via "gifts" to friends and associates.
Under electoral law, people making donations on behalf of others must give full details of the person providing the money.
"I was aware of arrangements whereby David Abrahams gave gifts to business associates and a solicitor who were permissible donors and who in turn passed them on to the Labour Party and I believed at the time my reporting obligations had been appropriately complied with," Watt said in a statement.
Watt said he had now been informed there were "additional reporting requirements".
"Once I discovered this error, I immediately notified the officers of the (Labour) National Executive Committee," he said.
The resignation threatened to reignite the scandal over donations that beset the last months of the government of former Prime Minister Tony Blair, in which it was alleged that titles and peerages were awarded in return for donations.
Labour could be forced to repay the money if an inquiry by the Electoral Commission finds rules have been broken.
Abrahams told reporters he donated the money through his secretary, Janet Kidd, and Ray Ruddick, a builder, according to media reports.
A total of 222,000 pounds of the total sum was donated since Gordon Brown became prime minister in June, making Ruddick and Kidd the party's third biggest donor in that time.
Ruddick was contacted by journalists looking into party donations and at first denied making any gifts to Labour, before eventually admitting he had done so.
He told the BBC he was "saddened" by Watt's resignation.
Shadow Chancellor George Osbourne said Brown had to come clear about what he knew about the matter.
"Despite today's resignation serious questions remain unanswered about the circumstances of this murky affair," said Osbourne.
"If the General Secretary knew, when did the chairman of the Labour Party and the prime minister first find out about how the money was being given?"
Prosecutors announced in July they would not file charges after a 16-month police inquiry into party funding that overshadowed Blair's last months in office.
Detectives, who interviewed Blair during their probe, had been investigating whether political parties nominated people for honours in return for donations.
