Gordon Brown will face questions at his monthly news conference today over why the property developer at the heart of Labour's funding scandal was granted planning permission for a business park after giving hundreds of thousands of pounds to the party.

Ministers overturned opposition from the Highways Agency to plans for a development next to the A1 in Co Durham shortly after Mr Abrahams donated £199,000 to the Labour party through intermediaries, it emerged last night.

Durham Green Developments, the company behind the plans, lists as its directors Ray Ruddick and Janet Kidd, the builder and secretary who have acted as Mr Abrahams's intermediaries in making massive donations to Labour.

The news will increase the pressure on Mr Brown, who is now facing questions about party funding sleaze, in addition to the debacle at Northern Rock and losing the personal data of every Child Benefit claimant in Britain.

Expert View

Brown's relaunch was holed before it even got under way. He must wonder whether it can get any worse

Philip Webster, Political Editor of The Times

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Last night Peter Watt, the Labour party's general secretary, resigned after admitting that he knew about arrangements to keep secret the source of donations from Mr Abrahams, which over several years totalled almost £600,000. Mr Watt said he had known that three named donors were intermediaries for Mr Abrahams, but had not passed on that information to the Labour party. He said he had not known he was doing wrong.

The scandal now threatens to embroil Douglas Alexander, a close ally of Mr Brown, who was Transport Secretary at the time that the block on the business park was lifted in October 2006.

A spokesman for Mr Alexander, now Secretary for International Development, strongly rejected any suggestion that he was involved and denied he had ever met Mr Abrahams.

Mr Abrahams last night threatened legal action against anyone who suggested he had given the money "in exchange for favours".

This morning the Labour party was forced into a hasty defence of its record in accepting the £600,000 donations from Mr Abrahams. Diane Hayter, the chairwoman of the party's national executive, described her disbelief and "deep shock" to learn at the weekend of the secret donations, and laid the blame squarely on Mr Watt's shoulders.

"What went wrong was that the general secretary, who knew that the people who sent us the money weren't the originator of that, didn't tell us and didn't tell the Electoral Commission," said Ms Hayter.

She claimed that the party had done its best to comply with the rules. "We checked out the people who had written their names on the cheques, who sent us the money, that they were UK citizens, that they were on the electoral roll. But Peter knew that the money had originated somewhere else and he didn't tell the national executive committee that."

Conservative and the Liberal Democrat fired a barrage of criticism at Labour this morning. They accused it of hypocrisy for claiming to clean up Tory sleaze, then indulging in practices that seemed to break the law forbidding secret donations that it had itself passed.

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