One of Tony Blair's most senior advisers was arrested in the cash-for-honours probe today on suspicion of perverting the course of justice and over alleged honours offences.

Ruth Turner, No 10's Director of Government Relations, was arrested at her home in London this morning. She was questioned at a London police station and bailed to return pending further inquiries.

The fact that police questioned Ms Turner on suspicion of perverting the course of justice suggests that they believe she could have been obstructing their inquiries. It will also spark speculation that the Scotland Yard team, headed by Assistant Commissioner John Yates, is widening its remit to look into the possibility of an attempted cover-up.

The arrest brings the cash for honours inquiry to the heart of Downing Street. The senior Labour party figure is one of four directors inside Downing Street and has regular contact with the Prime Minister.

Ms Turner was also questioned under the 1925 Honours (Prevention of Abuses) Act, following allegations that peerages were offered in return for secret loans.

In a statement released by 10 Downing Street, Ms Turner said: "I absolutely refute any allegations of wrongdoing of any nature whatsoever."

Mr Blair said in a statement this afternoon: "Ruth is a person of the highest integrity for whom I have great regard and I continue to have complete confidence in her."

A Downing Street spokeswoman added that any police investigation had to be allowed to run its course. "With all police investigations, it is important they are allowed to run their course and conclusions aren’t jumped to."

So far, 90 people have been questioned by the Yates team, including Mr Blair late last month, and four arrested.

Scotland Yard said that more investigations were required before a final file can be submitted to the Crown Prosecution Service. This means people are unlikely to be jailed before Tony Blair leaves office, but will cast a long shadow over his final few months.

In a statement, the Metropolitan Police said that the arrest would delay the delivery of a file on the inquiry to prosecutors, which many in Westminster had been expecting this month.

Downing Street would not say whether Ms Turner would continue in her role while on bail.

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