Peter Hain, who resigned from the Cabinet over allegations that he had failed to register political donations, has been interviewed by police, The Times has learnt.

The former Work and Pensions Minister was interviewed in the past few weeks by officers who are examining claims that he and his campaign team breached electoral law.

The interview is the last stage of the five-month inquiry into allegations that he failed to declare to the Electoral Commission £103,000 given to his campaign to become Labour’s deputy leader. A file could be sent from police to the Crown Prosecution Service within weeks.

The disclosure contradicts Labour Party officials who claimed three months ago that the inquiry was about to collapse. It is a further embarrassment for the party, which has faced sustained scrutiny in recent weeks over both the state of its finances and donations to individual MPs, which prompted the resignation this weekend of Wendy Alexander, its leader in Scotland.

The party, which files its annual accounts this week, is averting bankruptcy only because of a written guarantee that at least one union, Unite, will continue to provide funding. But, in another blow to Gordon Brown’s credibility, several key donors signalled yesterday that they were now reluctant to support the Prime Minister, suggesting that he was not able to turn around the party’s fortunes. Sir Gerry Robinson, the business expert who gave Labour £70,000 between 2001 and 2005, said that he would no longer be giving the party his financial backing. He said that Mr Brown had left the party in “probably an impossible position to come back from”.

Sir Gerry was among a number of high-profile party backers who spoke out against Mr Brown’s leadership in The Sunday Times. The revelation comes as speculation mounted yesterday about a replacement for Ms Alexander, with two former Labour First Ministers telling Mr Brown that he must not try to influence the outcome of the contest. The “back off” message from Jack McConnell and Henry McLeish was seen as a further indication of the waning of the Prime Minister’s hold on his party in Scotland.

Ms Alexander, a close ally of Mr Brown, stood down on Saturday — two days after Holyrood’s Standards Committee ruled that she should be barred from the Scottish Parliament for one day for failing promptly to declare donations to her leadership campaign last summer.

More serious allegations surround the case of Mr Hain, who failed to declare money that he had received until four months after the contest for deputy party leader in England. The law states that a candidate is required to report donations of more than £1,000 within 30 days.

Mr Hain, who was also the Welsh Secretary, ran a high-profile and expensive campaign but it failed dismally. He came fifth out of six candidates.

The first public signs of problems emerged in November when, days after the “Donorgate” allegations emerged about property tycoon David Abrahams’s hidden gifts to Labour, Mr Hain admitted that he had failed to declare a £5,000 donation from Jon Mendelsohn, Gordon Brown’s chief fundraiser.

Friends of Mr Hain claim he first became aware that there had been an “organisational breakdown” towards the end of last year when he and his aides discovered that 17 different donations totalling £103,000 had not been disclosed to the Electoral Commission.On January 10 Mr Hain finally went to the commission with details of what he had failed to declare. He also disclosed that five donations totalling £25,000, and one £25,000 loan were made through the Progressive Policy Forum (PPF) think-tank, set up several months after Mr Hain announced his candidacy. The PPF has never published a paper or held a meeting. The money it raised was transferred to Mr Hain’s campaign and appears to match the outstanding debts.

Mr Hain resigned in January. He said that he had made an innocent mistake and had simply forgotten about the need to declare. Police have since interviewed most of the individuals involved in fundraising during the campaign, before interviewing Mr Hain during the last month.

Mr Hain was contacted yesterday but declined to comment.

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