Peter Watt earned respect within Labour circles for leading the party through the cash-for-honours inquiry, large financial cutbacks and plans for the autumn election that never was.

The quietly spoken former nurse rose through the party’s ranks in a series of roles as an organiser and finance officer before being propelled into its top job soon after the 2005 election.

Ironically, two of his posts involved legal and financial compliance, making all the more odd his explanation for his resignation that he was unaware that political donations made via middlemen were illegal.

Soon after he became party general secretary, Labour faced an unprecedented police inquiry into claims that honours were sold to its financial supporters. Donors, politicians and staff were questioned by the police, putting the party under great pressure.

The use by Labour of secret loans from supporters to fund its 2005 election campaign also unravelled afterwards, forcing the party to implement severe financial cuts.

Mr Watt was less involved in the transition as Tony Blair was replaced by Gordon Brown but ran the election for the party’s deputy leader.

During this period, Labour insiders say that Mr Watt was highly regarded by politicians and staff for his calm leadership and upbeat manner.

He was often spotted smoking on the pavement outside the party’s London headquarters in Victoria Street, a victim of the Government’s smoking ban.

Despite the cuts, he invested in new online campaigning tools to prepare Labour for the next general election.

Suddenly, this year, the preparations were speeded up as Mr Brown and his allies gave orders to be ready for an autumn poll – only for it to be cancelled at the last minute.

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