Sir Christopher Evans, a biotech tycoon who lent £1m and was one of those arrested, is said to have had “multiple meetings” with Blair at No 10 to discuss “science projects”. Richard Caring, who lent £2m, is also claimed to have held “several meetings” with Blair.

The insider said: “These were not people who were tapped up out of the blue by Lord Levy for loans, they were well known to the prime minister. Only those who were personally approved by Blair were approached.”

Police have obtained internal correspondence from Downing Street. Of particular interest is thought to be a series of e-mails sent within Downing Street discussing those who had lent money and who were to be nominated for peerages. Detectives have also removed Levy’s diary.

Blair has refused to reveal details of any meetings he has held with the businessmen.

Senior sources are annoyed at what they claim is a biased police operation. Everyone arrested has been linked to Labour or the government and Blair is said to be preparing an “outspoken” response following the conclusion of the inquiry.

One source said: “Blair believes the whole thing has been biased. The Tories have been taking loans — and giving peerages to those making loans — for years, yet none of them have been arrested. Why not?”

Levy declined to comment.

Fifty questioned in honours inquiry

Scotland Yard has so far arrested three people and questioned at least 50 in the cash for honours inquiry, writes David Leppard.

Those arrested include Lord Levy, Labour’s chief fundraiser, Sir Christopher Evans, a donor and founder of Merlin Biosciences, and Des Smith, an adviser to the government’s city academies programme.

Those questioned under caution — an indication that they are being treated as potential suspects — are Ruth Turner, Downing Street’s director of government relations and John McTernan, Tony Blair’s director of political operations. Others who have been interviewed include Michael Howard, the former Tory leader, Ian McCartney, the former Labour chairman, and Lord Sainsbury, the science minister who lent £2m.

Chai Patel, Sir Gulam Noon, Barry Townsley and Sir David Garrard, who all made substantial loans, have also been quizzed.

Detectives are investigating possible criminal offences under the 1925 Honours Act. They are also looking for evidence of breaches of the 2000 Political Parties, Elections and Referendums Act, which makes it an offence for political parties to fail to declare donations.

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