Blair: Labour should be proud of donations

But Mr Blair said he was "proud" Labour was attracting money from what he called disaffected former Tory supporters.

Speaking on the BBC's "Breakfast With Frost" programme he said: "I think we have got to get out of this notion that there is something wrong with contributing to political parties."

Critics rounded on Labour when it emerged that Robert Bourne - the man heading the consortium that is set to buy the Dome - had recently given the party �33,000.

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Labour was also attacked earlier last week after attempting to keep private millionaire publisher Paul Hamlyn's donation of �2m.

The party was accused of breaking the spirit of a new law - coming into force next month - forcing those who donate more than �5,000 to political causes to be named.

Speaking about Mr Bourne's patronage, the prime minister said: "We weren't under any obligation to disclose his name but we did so."

Mr Blair told the BBC that he thought there was no public support for funding election campaigns from the public purse.

Public purse

In contrast, the Liberal Democrat leader Charles Kennedy is in favour of state funding of parties, which he said would help restore public faith in the political process.

Kennedy favours state funding

He told BBC Radio 4's World This Weekend: "Well may Tony Blair say, `Everything is all right and I'm delighted that we've got three or four very, very successful people who are willing to give us megabucks'.

"That is not good for the political process - full stop. It is just going to turn people off.

"If people felt there was transparency about their politics, they might feel better about politics."

Union blasts 'tacky' funding

The GMB union has attacked what it sees as Labour's move away from its traditional roots.

It feels that Labour is generating an image of a party heavily dependent on a few wealthy donors for its election fighting fund.

GMB general secretary, John Edmonds, said the situation looked "a bit bad" and "a bit tacky".

"I'm not sure that GMB members are too comfortable with the idea of people paying �2 million into any sort of political party and maybe there should be some sort of cap on individual donations," he added.

Costly election

Mr Blair said the party tried to obtain funding from a variety of sources and that private funding was essential with Labour Party running costs totalling around �20 million pounds a year.

The issue of party funding is particularly important with the parties facing costly general election campaigns.