If at this stage in a Labour government, the worst allegation that can be made...is that it talks to business then that is one that I am very pleased to live with

Brian Wilson, Energy Minister

The Tories, who have also taken money from Enron, have switched focus to Labour's relationship with Enron's accountant and auditor Andersen.

They claim Labour's alleged close relationship with Arthur Andersen, as it was then called, in opposition led to the lifting of a long-standing ban on the firm doing government work.

Downing Street's suggestion that it was effectively rubber stamping a decision by the outgoing Conservative administration was branded "misleading" by the Tory shadow cabinet office minister Tim Collins.

In 2000, Arthur Andersen split into two - its consulting arm becoming Accenture and its accounting business Andersen.

'Nothing suspicious'

Labour has also come under fire from the unions over its links with Andersen.

In 2000, the government commissioned Andersen to produce a report into the Private Finance Initiative (PFI), which subsequently proved highly influential on government policy.

Speaking on Radio 4's Today programme, John Edmonds said Andersen stood to make millions of pounds from PFI projects, making a nonsense of the government's claim that its findings were independent.

Energy minister Brian Wilson dismissed claims that the government's use of Andersen to produce the PFI report "looked suspicious".

"If at this stage in a Labour government, the worst allegation that can be made...is that it talks to business then that is one that I am very pleased to live with," Mr Wilson told Today.

Andersen is under investigation in the US for failing to spot alleged accounting irregularities prior to the collapse of Enron.

It also faces allegations of shredding vital documents relating to the case.

Long history

Arthur Andersen was effectively barred from government work in the wake of the De Lorean car company scandal 20 years ago and Margaret Thatcher started trying to sue the company for about �200m.

The Conservatives say Labour had close links with Andersen in opposition, with the company carrying out unpaid research work and senior Labour figure Patricia Hewitt, now trade and industry secretary, working for the firm in the early 1990s.

When Labour came into government the court case was settled for what the Tories claim was the relatively small sum of �22m.

Matthew Taylor wants more details in the open

Downing Street counters that when Attorney General John Morris decided to settle the case on legal advice he was only continuing a process of reviewing the case begun by the Tories.

The prime minister's spokesman said "if lawyers give strong advice to settle to avoid proceedings transferring to the UK from the US where there might be a less favourable settlement then it would be a foolish government that did not take that decision".

Counter-claims

Conservative vice-chairman Tim Collins said Downing Street's denials were "misleading".

"They are trying to imply that the Labour government simply rubber stamped a decision already taken by the outgoing Conservative administration to drop the legal case against Arthur Andersen.

"That is simply not true."

The Tories argue the Enron affair could dwarf the "sleaze" scandals that engulfed John Major's government.

Their concerns are echoed by Lib Dem spokesman Matthew Taylor, who wants all details of the settling of the De Lorean case made public.

Mr Taylor wants state funding of political parties, supported by small donations from individual party members.

Meanwhile, former Tory energy minister Lord Wakeham was facing calls to step down as chairman of the Press Complaints Commission over his links with Enron.