A senior minister faced accusations on Sunday that he had accepted illegal political donations, the latest funding row to hit Prime Minister Gordon Brown's government.
The Sunday Mirror newspaper said a donor channelled 3,334 pounds to Health Secretary Alan Johnson through a proxy, which is banned under political funding rules brought in by the ruling Labour Party to prevent sleaze.
The Johnson row is the third party funding dispute to hit Brown's government since he took office in June last year, pledging a fresh start after a Labour funding scandal that overshadowed Tony Blair's final months in office.
Johnson denied any wrongdoing, saying there had been no reason to believe the money had come from a third party and his team had declared the donation to the authorities correctly.
Work and Pensions Secretary Peter Hain, another senior cabinet member, quit the government last week after electoral authorities referred questions about funding for his deputy leadership campaign to the police.
While funding for other political parties has also come under the spotlight, Labour has suffered the brunt of the scandals and analysts said they gave Brown's critics ammunition.
After a smooth start, Brown is now fighting to improve his standing in the opinion polls after a crisis over the mortgage lender Northern Rock, administrative blunders and signs the economy is slowing.
Johnson said on Sunday he had been surprised to see reports that a donor to his campaign for deputy leader, Waseem Siddiqui, was given the cash by his brother and asked to write a blank cheque.
"There's no impropriety in this," Johnson told reporters. "Everything has been open and above board."
"We did what the law asks us to do. We checked that he was on the electoral role, that he's registered to vote in this country. We also checked, although we are not required to, whether he was a member of the Labour Party and he is."
In an interview recorded before the Johnson donation row broke, Brown defended his party's record saying he was determined to have an open and transparent funding system.
"Everybody knows that the political funding scandal that gained most attention was actually something that happened long before I was leader of the Labour Party," said Brown, referring to a police probe into illegal funding when Blair was leader.
No one was charged after a lengthy investigation.
"We are determined ... to have a more open more transparent party political funding system," Brown told the BBC. "I've made my proposals, I want other parties to accept them."
