The Labour Party recorded an operating loss of almost �9m last year, according to accounts published on Monday.

Getting our finances in order is not an optional extra

David Triesman, Labour general secretary

The figures show the party ended the year �6m in the red, after cash reserves and other factors had been taken into account.

The cost of mounting and the 2001 general election campaign and falling membership numbers have been blamed for the funding crisis.

Writing in the party's annual report, Mr Triesman said: "Getting our finances in order is not an optional extra.

"It is a prerequisite to our ability to organise, campaign and communicate."

The party's report claims an increase in membership rates and the move to cheaper premises will help boost party coffers.

Union cutbacks

Labour's general secretary David Triesman said last month the party was currently in the red to the tune of �10.5m.

Bernie Ecclestone's �1m gift caused trouble for Labour

He said it had a �5m overdraft and a �5.5m mortgage on its new headquarters at Old Queen Street, London.

The annual report says: "Although the party had a very successful year in fund raising, this was more than offset by an inevitable increase in expenditure.

"The current deficit, while manageable, is larger than we would like and we now have a period of sustained income generation from all our supporters so that the current deficit is cleared and a surplus is generated to support future general and other elections."

Last month, Mr Triesman admitted that a fall in party membership - down to less than 300,000 from more than 400,000 in 1997 - was partly to blame for the funding shortfall.

Cutbacks by the unions, which remain the party's biggest single source of income, have also contributed to the rise in debt.

Delaying last year's general election by a month because of the foot and mouth crisis is thought to have cost an extra �3m.

Bail out

Last month the unions came to the party's rescue by agreeing to give it �100,000 to help cover its summer bills.

Triesman: Fall in party membership partly responsible for cash flow problems

Some commentators claim big corporate donors have been scared away from Labour by allegations of sleaze, such as when Formula One boss Bernie Ecclestone's �1m donation to Labour was returned after claims he had tried to influence policy.

The party denies this but some senior figures have talked about a move to state funding for political parties to end uncertainty.

Desmond donation

Mr Triesman has admitted "certain people are disquieted" about Labour's policy of pursuing corporate donors.

But he said there was no evidence it was deterring ordinary members from making donations.

Mr Triesman has also defended Labour's decision to accept �100,000 from adult magazine publisher Richard Desmond.

"In the contemporary circumstances, you have to hope that some wealthy people whose values coincide with yours will give you money," Mr Triesman told the BBC last month.