TONY BLAIR has scrapped a vetting committee designed to stop political parties rewarding their donors with knighthoods and other honours.

The political honours scrutiny committee has been quietly axed despite Labour’s pledge to bring greater transparency into the honours system.

The move comes as research shows a strong correlation between Labour’s donors and the honours awards. The research found that three-quarters of people giving more than £50,000 had been honoured.

Since 1922 when David Lloyd George, the prime minister, was found to be selling honours, the scrutiny committee has investigated donors who received honours to ensure there was no link.

It has now emerged that Blair abolished the committee as part of a review in February to make the honours system “more open”.

The review followed an investigation by The Sunday Times 18 months ago that exposed the secrecy and spin at the heart of the system.

The scrapping of the committee was in the small print of the review and went unpublicised. A document on the website of the Cabinet Office says ministers have decided that “the committee’s role in inquiring into donations will no longer be necessary”.

Its powers to scrutinise honours awarded to MPs and personal recommendations by the prime minister have been passed to the House of Lords appointments commission. But the commission has not been asked to consider donations.

Jim Barron, secretary of the commission, declined to say whether this week’s Queen’s birthday honours list had been subject to any scrutiny.

Lord Dholakia, a member of the commission, said he had not been asked to look at donors. “I don’t really know how the present process is supposed to work. I wish I knew,” he said.

David Davis, the shadow home secretary, said: “It is extraordinary that a government that came to power with such a pretence of honesty and transparency should abolish, without consultation or discussion, the principal guarantor of the honesty of the honours system.”

A Cabinet Office spokesman said honours initiated by the prime minister would still be scrutinised for financial links. But this would exclude donors recommended by ministers, MPs or Labour fundraisers.

The system is supposed to be free from political influence and to recognise people who make an exceptional contribution to British life.

Research by The Sunday Times suggests that even under the old system Labour donors appeared to be favoured. The research was based on electoral commission figures on donors since 2001.

The government bestowed honours on 12 of the 14 individuals who had given more than £200,000 to Labour in that period. Of the 22 who had donated more than £100,000, 17 had received honours.

In total 80% of the money raised from individuals by Labour is from people who have been honoured.

Suzanne Evans, a statistics expert at London’s Birkbeck College, found that Labour donors are three times more likely to be honoured than Tory backers. “The probability that this difference could have occurred by chance is less than 3 in 1,000. Statistics cannot prove cause and effect but the results should arouse concern,” she said.

Every Labour donor who has given more than £1m has received a peerage or a knighthood. These include Lord Drayson, Lord Sainsbury and Sir Christopher Ondaatje.

Other donors who have been honoured under Blair include Sir Alan Sugar, the tycoon, and Sir Ronald Cohen, the venture capitalist. At least 10 donors have been given seats in the House of Lords with two holding ministerial positions.

In 1999 the committee on standards in public life recommended that the scrutiny committee examine every case in which someone who had given more than £5,000 to a party was being recommended for an honour of CBE or above. It also said the scrutiny committee must ensure there was no “undue preponderance” of honours conferred on big donors.

The government accepted the recommendations but said any investigation would be delayed until 2004. No such inquiry has taken place.

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