Lord Levy was a close aide of former prime minister Tony Blair

In a speech at Cambridge University, former PM Tony Blair's fundraiser said he wanted a �50,000 cap on donations.

He also spoke of the "hassle and aggravation" he had experienced.

A police investigation into the alleged sale of peerages found there was insufficient evidence against any suspect to secure any convictions.

Lord Levy's role in obtaining loans for Labour was at the centre of the allegations and he was arrested as part of the investigation.

"I believe there should be a cap on donations," he said in a speech to the Cambridge Union, which is a student debating society.

"I believe that should be set at �50,000. I believe there should be more state funding.

"There needs to be a cap on what we are donating in terms of fund-raising. There needs to be a ceiling put on how much we can spend on elections."

'Unpleasant experience'

Lord Levy said the "cash-for-honours" affair had damaged the political "system".

"It caused me personally a great deal of hassle and aggravation and my family.

"It was a very, very unpleasant experience for a long period of time but it is over, thank God."