Police have handed the results of their investigations into secret donations to the Labour Party to the Crown Prosecution Service to decide what, if any, further actions to take.
The case hinges around revelations last November that wealthy property developer David Abrahams had given several hundred thousand pounds to the party but had disguised the origin by passing the money through intermediaries.
It was the second time in just 18 months that funding scandals had hit the party and came as Gordon Brown was starting to see his once strong public ratings start to tumble just five months after taking over as prime minister from Tony Blair.
"We have been handed a file in relation to a police investigation into a potential breach of the Political Parties, Elections and Referendums Act 2000 as a result of donations made through intermediaries," a CPS spokeswoman said.
She said the CPS lawyers now had to examine the file to see whether there was enough evidence to prosecute anyone or to ask police to investigate further or to dismiss the case completely.
She could not give any idea of how long the process could take.
The law states that a person must not disguise the origin of a donation and anyone giving more than 5,000 pounds in a calendar year must declare the amount and the recipients at the start of the following year.
The day after the story was broken by a Sunday newspaper, Peter Watt, Labour's general secretary, quit, admitting he had known that Abrahams' money had come through intermediaries to disguise its origin.
The party's deputy leader then admitted she had received some of the money but had not known the declared donor was not the real one, and Brown launched an inquiry headed by the Bishop of Oxford.
A year later, the case was referred to the police who have been investigating quietly ever since.
The 2006 cash for honours investigation dogged Blair's last months in office although no prosecutions resulted.
The fresh move in the secret donations scandal comes as Brown prepares to celebrate his first anniversary in power with his personal ratings at rock bottom and the party trailing the Conservatives by a record 20 points.
