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They had deliberately circumvented the strict disclosure requirements that Blair had introduced to clean up party funding. In doing so they had secretly raised nearly £14m ahead of last year’s general election.

"I, as party treasurer, knew nothing about it," declared a furious Jack Dromey, husband of Harriet Harman, constitutional affairs minister. "It was the Labour party that campaigned in opposition for action to ensure that there was the necessary transparency as part of the clean-up of politics. The Labour party [now] needs to put its house in order."

Infuriated by Dromey’s outburst, one loyal Blairite riposted: "He’s standing up and saying, ‘I’m the worst treasurer who ever existed, I don’t know anything about any loans’. It’s total lunacy. He’s a f****** p****."

The Blairite suggested that Dromey had spoken out only in the hope of mortally wounding Blair. "Someone’s set him up to it," said the source. "I think it’s [Gordon] Brown."

This weekend the infighting and scandal were showing few signs of abating. It emerged that a fourth businessman — the ready-made curry millionaire Sir Gulam Noon — had secretly lent money to the party and had subsequently been nominated for a peerage.

It was disclosed, too, that McCartney had also been kept in the dark about the lenders. Last October, while he was in hospital for a heart bypass operation, he was asked to confirm that four men nominated for the House of Lords by Blair were suitable candidates. McCartney signed forms declaring that there was no link between the men’s nominations and donations they had previously made to the party. These forms were then sent off to the committee that vets potential peers.

However, McCartney knew nothing about huge loans they had also made to Labour.

"Had I known that any of these nominees had lent the Labour party money, even though this information was not requested by the commission, I would have insisted that details be included and would not have signed the papers without including them," McCartney said.

Blair had hoped to spend last week once again relaunching his reform agenda. Instead he was hunkered down in his bunker attempting to fight off allegations of sleaze.

This time round it went all the way to the top. On Thursday the prime minister admitted that he personally had authorised the secret loans scheme that Levy had then so vigorously exploited.

Blair’s insistence that no rules had been breached rang hollow. The decision to take millions of pounds from tycoons without declaring it plainly ran against the spirit, if not the letter, of his own rules.

It was noted, too, that loans were potentially much more likely to pervert the democratic process than straight donations because they leave the party in hock to the lender.

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