Gordon Brown said today that secret donations to his party through middlemen were "completely unacceptable" and promised they would be repaid, as the funding scandal engulfed his party chairman and two Cabinet Ministers.

Questioned during his monthly press conference, the Prime Minister insisted he did not know until Saturday night about £600,000 of donations made through four intermediaries to the Labour Party by property developer David Abrahams.

In a day of turmoil Harriet Harman, the Labour party chairman, admitted she had received a £5,000 donation through Janet Kidd, a secretary, during her campaign for the Labour deputy leadership. She said she had not realised Ms Kidd was acting for Mr Abrahams and that she would return the money.

Hilary Benn, the Environment Secretary, also disclosed he had turned down a donation from Ms Kidd after he was warned it was on behalf of Mr Abrahams. He later accepted the money when it was offered as a direct donation.

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

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• On the spot: if Benn knew, why didn't Harman?

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Douglas Alexander, the International Development Secretary, was also forced to deny any wrongdoing after it emerged his old department gave Mr Abrahams the go ahead to build a business park shortly after a large donation to the Labour party.

It emerged today that Mr Abrahams had relied on four intermediaries to make donations in secret. Janet Dunn, who is thought to have been the first person used by Mr Abrahams, donated £25,000 on January 31, 2003. He later turned to Ms Kidd and Ray Ruddick, a builder, both of whom are directors of a number of his business interests, and to Newcastle-based solicitor John McCarthy, who was used as a conduit to donate more than £200,000.

Subjected to a barrage of questions at his press conference, Mr Brown pledged action to clear up the funding process and announced an internal investigation.

"What has happened, where political donations have not been lawfully declared, is completely unacceptable, cannot be justified in any way and this behaviour should never happen again in future," Mr Brown said at Downing Street. He added: "The money was not lawfully declared so it will be returned."

Mr Brown stressed that an Electoral Commission investigation would ascertain whether other donations had been given through middlemen and that Labour would act on its conclusions. The Commission was this afternoon reported to have consulted the Crown Prosecution Service on the matter, amid speculation that a criminal investigation could follow.

He added that the Government had launched its own review into the way funding is received, chaired by the retired judge Lord McCluskey and the former Bishop of Oxford, Lord Harries. They are due to report back to the party chairman, Ms Harman, on the changes that need to be made.

The Prime Minister insisted he did not recall meeting Mr Abrahams and the first he knew of the scandal was when he was contacted over the weekend about a Sunday newspaper investigation.

"The first I knew of this was on Saturday night," he said. "I may have talked to Mr Abrahams. I do not recall those conversations," he added.

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