Gordon Brown attempted to deflect attention from the row over Labour's secret donations today by promising new laws to reform party funding.

As a police investigation got underway into how £650,000 came to be donated in secret by the property developer David Abrahams through intermediaries, the Prime Minister said he wanted to pass new legislation "quickly" with cross-party support.

Earlier, David Cameron had indicated that the Conservatives would support attempts to cap all donations at £50,000, which he said was originally a Tory proposal, but warned that this would have to apply to the trade unions as well.

However, despite the apparent consensus, pressure on Mr Brown showed no sign of easing today with Mr Cameron claiming that the party's funding chiefs were either "utterly dysfunctional" in accepting the money from Mr Abrahams, or had not been truthful about how much they knew of the donations.

The Prime Minister, speaking as police interviewed the Liberal Democrat MP Chris Huhne, who originally reported the matter, made a plea for unity on new legislation at a lunch hosted by the Newspaper Society at Westminster.

"There will be legislation quickly on this. I hope all parties will support this legislation," the Prime Minister said.

"I have told the trade unions we have to make changes to the political levy so that is transparent as well. I’m prepared to move forward with this legislation."

The Prime Minister again expressed his remorse over the donations row saying: "It’s unacceptable. I’m angry about it, but we have got to deal with it."

He added that he was not proposing further public funding for political parties "at this stage", but added: "I believe we have got to take all the steps necessary to avoid these things happening in the future."

Mr Cameron and Mr Huhne, however, kept up the pressure on the Prime Minister, with the Conservative leader again questioning the role of Jon Mendelsohn, his chief fundraiser. Mr Mendelsohn claimed that he had been reassured privately by Peter Watt, the former Labour general secretary, that donations made through middlemen were legal so took the matter no further.

"He somehow thought it was legal but at the same time was deeply unhappy about it, but told nobody," Mr Cameron said, at a Westminster press conference. "Either this organisation is utterly dysfunctional or we are not being given the whole truth."

The Conservative leader added that he supported entering new talks on party funding, but that this should also apply to the unions.

Times Recommends

• Phoebe Caldwell wins Times/Sternberg Award
• Raging against fake pop has its own pitfalls
• How a voice for everyone led to stalemate