Labour MPs voiced fears last night that the party’s link with the unions was under threat from proposals to limit the size of individual donations to political parties.

A meeting of Labour’s group of trade union MPs heard that Sir Hayden Phillips, in his review of party policial funding, was likely to propose a cap of £50,000 on donations.

According to several MPs present, the idea was tacitly backed by Downing Street as a way of achieving its main goal of limiting spending by parties throughout a Parliament, rather than just at the time of a general election.

The present rules restrict spending only in the run-up to, and during, the election and Labour claim that the Conservatives are already spending big sums, that it could not match, in marginal constituencie.

Last night’s meeting was told of hints that No 10 might back the limit on donations as a way of getting Tory agreement to a ceiling on spending.

But there was unanimous agreement among MPs that limiting the amount a union could give to a figure as low as £50,000, and relying on donations from individual members to raise the sum to present levels, would effectively mean the end of the union link.

MPs urged minsiters present to tell Downing Street that it should not countenance the change.

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