A deal to speed up the construction of a multi-million pound bypass in time for this year's British Grand Prix has been defended by the government.

The road would not have been finished in time for the Silverstone event earlier this month had it not been for ministers deciding to approve an �8m spending boost.

Mr Ecclestone had his cheque returned to him

Civil servants warned former transport secretary Stephen Byers that the cash could breach normal spending criteria on value for money.

But it is the intervention of Tony Blair in the affair that has caused raised eyebrows.

The prime minister's involvement was referred to in correspondence from Mr Byers to the chief executive of the Highways Agency telling him to proceed with the work.

Mr Byers wrote: "I note that, in connection with their agreeing to retain the British Grand Prix as part of the Formula One season, the prime minister also gave a commitment to the FIA that those difficulties [congestion around Silverstone] would not arise again."

Mr Blair reportedly gave the guarantee that the racetrack would be linked to the M1 and M40 as part of a �56m road-building scheme, provided that a threat to axe the British Grand Prix was dropped.

But a spokesman for Mr Blair denied the construction of the bypass was the outcome of a deal with the operators of Formula One.

Number 10 has insisted that the government's support for the Grand Prix was well known.

'No deal'

"Government has been working with Formula One to ensure that Grand Prix stays in the area and there have been a series of well-publicised meetings involving Trade and Industry Secretary Patricia Hewitt and sports minister Richard Caborn," said a spokesman.

"The prime minister's letter was part of that process and there is no question of a deal."

Liberal Democrat Treasury spokesman Ed Davey: "According to the letter from the secretary of state [Stephen Byers], the prime minister gave a commitment that the congestion would be tackled and we have to ask questions when the prime minister gets involved in these sorts of projects."

Transport Minister John Spellar told BBC Radio 4's World at One programme that Mr Blair had talked to the FIA about the issue and concern about keeping the Grand Prix in the UK had led the government to take action.

Conservative transport spokesman Tim Collins said that his party welcomed the fact the future of the British Grand Prix had been secured.

"However, many other towns and villages would welcome the preferential treatment given in this case, particularly in light of the cancellation of the bypass programme by the Labour government when it came into office in 1997."

Controversy

The bypass opened in time for the Grand Prix earlier this month, although it has since closed so that contractors can finish work on the road.

The story is likely to reignite the controversy over F1 boss Bernie Ecclestone donating �1m to Labour in 1997.

Debate over the gift being allegedly connected to a decision to exempt the sport from a tobacco advertising ban led to Labour returning the cash.

The party fiercely disputed claims the donation and the policy decision were in any way connected.