The Tory party conference got off to an embarrassing start today after it emerged that the Conservatives have taken large donations from hedge-fund managers whose firms made vast sums of money from taking bets in some of Britain’s crisis-hit banks.

David Cameron, the Tory leader, has accepted almost £2m from hedge-fund managers who took bets on banks such as Halifax Bank of Scotland, which was forced into an emergency rescue by Lloyds TSB, and Bradford & Bingley, which is itself on the brink of collapse.

The practise of taking down bets on shares, known as short-selling, has now been temporarily banned by the Financial Services Authority, the City watchdog, for all bank stocks. However the revelations will be particularly embarrassing for Mr Cameron and George Osborne, his shadow Chancellor, since they both specifically declined to criticise the activity earlier this month.

A string of the hedge funds have been offered membership of an exclusive dining club reserved for backers who give £50,000 or more to the Conservative party.

Cameron has given small dinner parties for members of the so-called “Leader’s Group”, where the donors get to chat in private to the Conservative leader. He has hosted at least one dinner for donors at his home in west London.

The revelations – the subject of a Channel 4 Dispatches programme tomorrow night – are likely to reignite the row over how the Tories are funded and raise questions about Mr Cameron’s personal commitment to transforming the party's image as a haven for the wealthy.

Speaking as he opened his party’s conference in Birmingham, Mr Cameron denied he was steering clear of criticising bankers and hedge fund managers because they contributed heavily to Tory coffers.

"They don't have any influence on my policy at all”, he said. "What matters most of all is safeguarding the depositors in a bank like Bradford & Bingley."

Big donors who are entitled to automatic membership of Mr Cameron’s club include Paul Ruddock, who has donated £259,500 to the Conservatives. He is the co-founder and chief executive of Lansdowne Partners Limited, which has taken tens of millions of pounds in short positions in Halifax Bank of Scotland (HBOS), Barclays and Northern Rock.

The other high profile lender is Michael Hintz, who has given £662,500 and whose hedge fund CQS has shorted shares in Bradford and Bingley.

There is no suggestion that Ruddock or the other Tory hedge-fund donors have done anything improper. His lawyers said yesterday that he had no direct role in the short-selling by his firm and that, anyway, the bets were held on behalf of its clients. The donation to the Conservatives was made by Ruddock personally and has no connection with Lansdowne.

But the disclosure that the Tories are being funded by wealthy businessmen, whose firms aim to make huge profits by betting that the value of shares will fall, will not help Cameron’s efforts to persuade voters that he is the man to guide the country through an economic downturn.

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