The Conservatives have described the Labour funding scandal as "a sorry tale of law-breaking at the highest level".

Speaking during a debate in the Commons on Tuesday, Francis Maude said "comprehensive" party funding reform was needed after it emerged that property developer David Abrahams donated more than £650,000 to Labour through third parties.

"This has been a sorry tale of law-breaking at the highest level by one of Britain's major parties," the Tory frontbencher told MPs.

"For the second time in two years the police are investigating a Labour funding scandal."

He said there "must be not a penny more of additional state funding for parties without comprehensive reform that really does address the concerns the public have about party funding".

Maude called on justice secretary Jack Straw to provide "some genuine answers" and give the public "some hope that long-term comprehensive reform can eventually be delivered".

But claiming that the government had "stumbled from incompetence to chaos to law-breaking", he predicted that "we may have to wait some time".

'Incredible'

Maude said that the longer the row had gone on, "the more unanswered questions arise".

Responding to criticisms of Tory funding practices from Labour MPs, he said: "There's only one party here that's being accused of law breaking.

"There's only one party whose leader has admitted the law was broken. Just in case you haven't got the message it is your party."

And he dismissed as "unbelievable" and "literally incredible" claims that neither Jon Mendelsohn nor former Labour general secretary Peter Watt, who resigned over the scandal, knew that the Abrahams donations were illegal.

"The requirement to disclose the identity of donors was the central feature of the 1999 Act [on party funding]," he said.

"This is not some arcane technicality, some bylaw, some obscure rule. The breach of this requirement is a criminal offence and anyone involved in political fundraising knows this."

Democracy

Responding to the accusations, the justice secretary admitted that Labour had received money illegally.

But Straw said he could not comment on issues that were subject to a police investigation.

He told MPs that Britain's politics was largely corruption-free, although any individual issues should be dealt with.

Straw also insisted that political parties were essential for a functioning democracy, and their activities had to be paid for.

"Democracy does not come free," he said.