The Conservative Party is now demanding an investigation.

Smallpox facts

Can transmit through air Kills about 30% of those infected No cure First symptoms can be mistaken for flu Officially eradicated in 1980 after global vaccination First used as weapon by British against Native Americans in 18th century

But the government has denied any impropriety in the award of the contract, which has infuriated rival drug producers who say they were not given a chance to bid.

Dr John Brown is chief executive of Acambis Plc, one of several companies initially approached by the UK Government and currently manufacturing 200m doses of a smallpox vaccine for the US.

He told BBC Radio 4's Today programme: "It's unlikely that anyone would be able to get a fully clinically-tested vaccine before us."

He said he had not been officially told Acambis had missed out on the contract.

Decision defended

Health Minister John Hutton, speaking on the same programme, said: "The reason why PowderJect was given the contract, as we've tried to make clear, was for one reason and one reason alone.

"They were the only company which could provide the type of vaccine we wanted as quickly as possible.

"Dr Brown's company make a different strain of the vaccine and we decided, having looked at the issues very carefully, not to procure the particular strain that his company manufacturers."

Hutton: no impropriety

Mr Hutton said advice was sought from the permanent secretary at the Department of Health, who confirmed the contract should be placed with PowderJect.

The minister said the industry could not have been told in advance of the award because of commercial confidentiality.

But Tim Collins MP, Conservative vice-chairman, demanded an inquiry and the establishment of a cross-party group to supervise all party donations.

Infectious

He told the Today programme: "This is bound to happen until we have a proper culture of openness and a proper mechanism where we don't have to take ministers' words for it."

Referring to previous 'cash-for-favours' claims, Mr Collins said the smallpox contract could be "another coincidence in a long chain of coincidences after Mittal, Enron and Formula One".

Liberal Democrat MP Norman Baker said: "We've a situation where someone who has given money to the Labour party has won a contract in less than open circumstances.

"Now part of that is the fact that the British Government, and successive governments, have an endemic secrecy at its heart.

"We are not treated like adults in this country like in the US."

Both the US and Russia have already stockpiled anti-smallpox vaccines in the wake of 11 September, amid fears of germ warfare.

A DoH spokesman has said the smallpox vaccine was being bought "as part of the government's continuing vigilance against international terrorism", although there was no "credible threat".