Gordon Brown’s election chief, Douglas Alexander, ordered his sister not to resign as Scottish Labour Party leader for fear of causing fallout throughout the Cabinet.

The disclosure that Mr Alexander put pressure on his sister, Wendy Alexander, came as Peter Hain admitted failing to register donations properly and as the Prime Minister tried to rally his demoralised party at a meeting of backbenchers.

If Ms Alexander had resigned over an illegal £950 donation, pressure on Harriet Harman to step down as Mr Brown’s deputy over an illegal donation of £5,500 could have proved irresistible. Ms Harman is further being investigated over a failure to declare a £40,000 mortgage to finance her leadership campaign. The latest embarrassment will increase pressure on Mr Brown to strip her of her role as party chairman.

It also emerged that Ms Harman’s husband, Jack Dromey, was at the top of a secret list of approved candidates to be given safe seats in the event of a snap election.

Q&A: secret donor scandal

Our Political Correspondent analyses the origins of the secret donor sleaze row and its potential implications

• Timeline: Labour's secret donor row

Multimedia

• Video: Brown under fire in Parliament

• Pictures: Labour funding row - key players

BACKGROUND

• A walking paradox who gave £600,000

• Brown is made to play the fool in stage farce

• Jack Dromey declares he is victim of concealment

Related Links

• David Cameron piles on pressure in funding row

• The Zidane moment of madness

• Now for the scandals that matter

The Times has learnt that Mr Alexander, the International Development Secretary and one of Mr Brown’s closest Cabinet allies, delivered the stark message to his sister on Sunday afternoon. Mr Brown is also understood to have urged Ms Alexander to stay on.

Sources in Ms Alexander’s camp say that until Sunday afternoon she was on the point of resigning because of the turmoil the illegal donation to her leadership campaign was causing her and the party. One source told The Times: “She was completely down and incredibly angry. She wanted to go but then the message came from London: you must stay. After that we had to decide how to present her decision as a decision made by her.”

Mr Hain admitted that other donations to his campaign had not been properly registered. He has already said that a £5,000 gift from Jon Mendelsohn, Labour’s fundraiser, had not been registered, but yesterday he told the Electoral Commission that others had not been notified. Mr Hain, the Work and Pensions Secretary, said he was reviewing all donations to his campaign and apologised for the “extremely regrettable” events. “I am preparing a declaration to the Electoral Commission,” he said.

Labour sources told The Times that it had been made plain to Ms Alexander that if she fell on her sword over the illegal money from a Jersey-based businessman, it would be difficult for Ms Harman not to follow suit. “That would have left Gordon incredibly exposed,” the source said.

Ms Alexander’s position is different from Ms Harman’s because she wrote to her benefactor thanking him for the donation and because of suggestions in her own camp that it might be questionable. Ms Harman was alerted to her £5,000 donor by Mr Brown’s leadership team and maintains that she did not know that it was originally from David Abrahams.

Ms Harman’s failure to declare a £40,000 mortgage extension taken to pay off campaign debts is under investigation by the Electoral Commission. Her campaign team admitted that a shortfall of £22,808, had “so far been met by a loan to the campaign from Harriet Harman”. The mortgage extension, taken out with her husband in February, had helped to pay off an earlier loan that had been properly declared, it added.

The Times has learnt that Mr Brown put Mr Dromey at the top of a secret list of candidates to be given safe seats in the event of a snap election. Mr Dromey would almost certainly have joined Ms Harman in the Commons had Mr Brown held an autumn poll. The union official declined to comment last night. Ms Harman and Mr Dromey insist that they had no idea that Mr Abrahams was making cash gifts to the party.

Mr Brown told the Parliamentary Labour Party that he would deal with the scandal “rigorously and surgically”. “I am as furious as anyone,” he said, before spelling out his proposals to break the deadlock on party funding, which include changes to the trade union levy.

— Paul Gray, the official who quit after taking the blame for the loss of two discs containing bank details of 7 million families, is back at work on a plan to improve civil servants’ skills, two weeks after he resigned as chairman of HM Revenue and Customs.

Times Recommends

• What makes the perfect mum?
• To keep me stress-free, no more awareness days, please
• What do lottery winners buy?