The Prime Minister who came to power promising to make politics whiter than white has suffered the humiliation of being the first holding his office to be questioned by police conducting a criminal investigation.

With the gaze of the nation and the press averted elsewhere at the horror of the Suffolk murders and the police report into the death of Diana, Princess of Wales, Tony Blair defended his nomination for peerages of figures who had given secret loans to Labour before last year’s election.

He was questioned in his study in Downing Street for about an hour and 40 minutes by two officers from the team led by Assistant Commissioner John Yates that has conducted the cash-for-honours inquiry, involving interviews with 90 people, for nine months. Mr Yates did not attend. His deputy, Detective Chief Inspector Graeme McNulty, led the questioning.

There were accusations last night, denied by No 10, that the decision to have the interview on the day of the report into the Princess’s death was a blatant attempt to “bury bad news”. The Tories noted several “bad news” announcements, including the closure of 2,500 post offices.

The Times has learnt that negotiations between the police and Mr Blair over the date for an interview have gone on for weeks and the date was finally decided by No 10.

The policemen arrived and left unnoticed. The interview became public only after the Prime Minister’s spokesman went to the Commons within minutes of it finishing to tell reporters that it had happened. Camera crews that might have been in Downing Street were deployed elsewhere.

Pressed on the claim that the interview had been deliberately designed to coincide with the report about the Princess, Mr Blair’s spokesman said: “Categorically, that was not the case at all. Categorically, there was no linkage with other events.”

Even so, it is clear that Mr Blair would have had the final say over the timing. It would have been one of the few opportunities before Christmas. He left for a European summit yesterday afternoon and will visit the Middle East soon.

It appeared unlikely last night that Mr Blair would face charges. He was not interviewed under caution, and did not have a lawyer with him. Only a Civil Service notetaker was there, apart from Mr Blair and the police.

There has been nothing like it since the days of Lloyd George, who had to explain the open selling of honours to the Commons in 1922, provoking the very legislation under which the present inquiry began.

The sparse information given out by No 10 indicated that Mr Blair is holding to his line that there is nothing wrong in handing party peerages to figures who have supported the party financially. It would be against the 1925 Honours (Prevention of Abuses) Act to promise peerages in return for money.

Mr Blair’s spokesman said that he had told the police why he had nominated each of the individuals and he did so as a party leader in respect of peerages reserved for party supporters as other party leaders did. “The honours were not therefore for public services but expressly party peerages given for party service. In these circumstances the fact that they have supported the party financially could not conceivably be a barrier to their nomination.”

The men who lent money and were nominated for peerages were Barry Townsley, a stockbroker who has donated to a city academy; Sir David Garrard, a property developer who gave to an academy; Chai Patel, of Priory Clinics; and the food tycoon Sir Gulam Noon. They were blocked by the Lords appointments commission when their loans were made public. But the No 10 statement raised questions over the political services that the four had given. At least one had no record of a party link until the loan was revealed.

Downing Street had no comment last night on claims that he was asked questions about previously unknown minutes of a meeting between Lord Levy, his personal fundraiser, and Sir Christopher Evans, a biotech engineer, both of whom have been arrested as part of the inquiry.

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