The prime minister selected Chai Patel, Sir David Garrard, Barry Townsley and Sir Gulam Noon from a list of more than 40 candidates drawn up by aides last summer.

The disclosure shows for the first time Blair’s hands-on role in the loans for honours scandal. He is thought to be the only person involved in choosing nominees who was aware of the identities of the financial supporters.

He had previously accepted responsibility only for a loans scheme without admitting he was fully informed of who the lenders were. However, the insider said: “When Blair selected his shortlist of peers he was aware of which ones had given loans. He was given a long list of names to choose from and personally selected which ones to put forward. The prime minister knew exactly what was going on with the loans from the very beginning.”

It has also emerged that the Appointments Commission, the watchdog that vets peerages, warned Blair informally after the general election it would no longer tolerate unsuitable candidates who had financially supported parties being elevated to the Lords. The warning is understood to have been prompted by a number of Labour and Tory nominees in 2004.

This year the commission blocked the four Blair nominees who had made loans to the party. Although it had not been told of the loans, the commission considered three of the four unsuitable. A further seven Labour nominees, none of whom made donations or loans to the party, were cleared. It has also been established that:

• Lord Levy, the Labour party’s chief fundraiser, is to “scale down” his activities. Although he will not resign, friends believe he will no longer raise money for the party. One said: “They have successfully fought three elections on the money he has raised and now his name is being dragged through the mud.”
  
• In addition to a request to Downing Street for information, detectives are seeking to stop Patel appearing before a parliamentary committee on Tuesday as he is seen as a key witness.
  
• Levy’s friends have said he maintains he was against the loan scheme and that it was “all Tony’s idea” to save Labour from bankruptcy.
  
• Patel has claimed Levy personally advised him he did not need to declare his loan to Labour on a form accompanying his peerage nomination. A spokesman for Patel said: “Michael Levy was Chai’s source of advice.”
  
• Gordon Brown, who last week denied any involvement in Labour fundraising, is said to have regularly attended private receptions with the party’s biggest donors. However, he always excused himself before the high-profile gala dinners.
  
• At least one of the businessmen behind Labour’s loans is not even a member of the party. A spokesman for Andrew Rosenfeld, chairman of Minerva, a property company, said he did not believe the businessman was a Labour supporter.
  
• The last loan was collected just three weeks ago — £2m from Richard Caring, a clothing millionaire and close associate of Philip Green, owner of the Bhs store chain. Caring made the loan after Blair sent a televised message to a charity ball organised by the tycoon in Russia.
  
  

  Last week Blair revealed the names of 12 businessmen who have loaned Labour almost £14m. They included Sir Christopher Evans, a biotechnology entrepreneur embroiled in a Serious Fraud Office investigation; and Rod Aldridge, who quit as executive chairman of Capita, the support services group, last week after his loan became public.

  Although Lord Sainsbury, the science minister, is a donor, he provided a further £2m as a loan so that he would not be seen as bankrolling Labour’s election campaign, an insider revealed.

  There is growing anger among Labour backbenchers. Blairites are convinced Brown has stoked up the row to undermine the prime minister, who is on a visit to Australia. They, in turn, have been briefing against Ian McCartney, the Labour chairman. They say his suggestion he was duped into signing nominations while recovering from heart surgery in hospital has also fuelled the row.

  Like Patel, Garrard is due to appear before the Commons public administration committee on Tuesday. Levy is scheduled to appear in May, although reports suggest police will interview him within the next three weeks.

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