Ken Livingstone has suspended one of his most senior advisers and referred allegations against him to the police.

The Mayor of London, however, said that the move was intended to enable Lee Jasper, his race and policing adviser, to clear his name.

Mr Livingstone has been increasingly embattled over claims of financial irregularities in publicly-funded organisations run by friends and associates of Mr Jasper.

Police are investigating six organisations funded by the London Development Agency (LDA) which hands out hundreds of millions of tax-payers’ cash each year.

With the London mayoralty elections just over two months away Mr Livingstone has chosen to cut adrift one of his closest advisers to limit any damage.

In a statement Mr Livingstone said that he had agreed to a request by Mr Jasper to suspend him and refer allegations to the police to help put a stop to what he called a “disgraceful political charade.”

He said: “I believe this investigation will exonerate Lee Jasper and show this to be a shameful campaign.”

Mr Jasper claimed the London Assembly has deliberately refused to hold any hearings on the matter until March to “string out” the allegations.

He said: “The deliberate aim of this delay is not to achieve clarity but to string out a series of unfounded and poisonous allegations in the media, and investigation by the police will clear my name and put a stop to this.”

A spokesman for Scotland Yard said police will examine any material that is handed to it on any subject where there are claims of a criminal act in London.

Mr Jasper was linked to alleged funding irregularities at a series of London community projects in December. He denies any wrongdoing.

One newspaper claimed hundreds of thousands of pounds that had gone to the groups had not been accounted for.

An internal review by the London Development Authority cleared Mr Jasper last month. The London Assembly has since called for an independent inquiry. The LDA is still investigating the funding of 13 projects.

The issue has also raised questions over relationship between Mr Livingstone and his advisers and the power they wield at City Hall.

Boris Johnson, the Conservative Candidate for Mayor, said:

“This is an outrageous attempt to avoid scrutiny. It was only 12 hours ago that the Mayor informed us that he had full confidence in Mr Jasper. What has changed his mind?

“Mr Jasper has been suspended – presumably on full pay – until after the election, in the hope that the full facts will not come out."

Brian Paddick, the Liberal Democrat candidate, said: “If it is true that the Mayor has suspended Lee Jasper because of the criminal investigation, then this is a serious escalation of the situation regarding what is one of the Mayor's personal appointments. It casts serious doubt on the Mayor's judgment in terms of his selection of advisers.

“You can tell from Ken Livingstone's demeanour that he is seriously worried by the bad smell that is emanating from his own administration and his own advisers."

He added: “Because of the complexity of the allegations that have been made, it's unlikely that any of these investigations will be concluded by 1 May. What the voters of London have got to realise is that if they re-elect Ken Livingstone, the chances are they're in for a nasty shock in the months following the election.”

Mike Tuffrey, Leader of the London Assembly Liberal Democrats, said: “The Mayor has been adamant that Lee Jasper is innocent of all accusations brought against him in the media. If this is the case, why refer these allegations to the police? If the Mayor is certain that Lee Jasper has not acted illegally, surely he is wasting police time with this matter.

“The London Assembly has been demanding evidence on these allegations for a long time. Yet it was only last week that the London Assembly received over 900 pages of documents requested. These must be examined before we can conduct a proper scrutiny with Lee Jasper and other Mayoral adviser colleagues."

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