Gordon Brown (Getty Images)
Gordon Brown wants to ban wealthy donors such as Tory peer Michael Ashcroft from pumping cash into marginal seats ahead of an election.
Jittery Labour MPs want a new law to stop billionaire businessman Lord Ashcroft from spending a fortune trying to "buy" their seats.
Cabinet Minister Geoff Hoon outlines plans for a crackdown today and hints new limits on donations could be imposed after the "cash for honours" scandal.
But the proposals caused a row last night, with David Cameron firing off an angry letter to the PM.
The Tory leader threatened to quit talks on party funding unless Mr Brown caps all donations - including the millions Labour gets from the unions.
It came as Mr Hoon signalled ministers may act over accusations that mega-rich backers can effectively "buy" around 100 key seats by pouring in cash for leaflets and adverts.
Labour MPs have deluged party bosses with complaints that they cannot compete with the millions being spent by Tory deputy chairman Lord Ashcroft - even though the election could be 18 months away. Mr Hoon said: "It's important that we restrain the amount of money that can be spent.
"Otherwise we simply end up in a situation where all political parties are trying to outbid each other in some sort of financial arms race. That cannot be good for democracy.
"And I am worried about the way in which one man, in this case Lord Ashcroft, appears to be dominating one political party in order to influence the outcome of elections in particular constituencies."
Mr Cameron hit back after Mr Hoon's pre-recorded remarks for GMTV were leaked. The Tory leader claimed Labour's plans to reform funding would amount to a "raid" on taxpayers' cash of up to £90million.
The changes could see a £50,000 limit on individual donations. Mr Cameron called for a block on the huge donations from unions to be included, which would cut off one of Labour's main supplies of cash.
He said: "There is no case for additional State funding for political parties without fundamental reform. A comprehensive cap on donations is essential."
The row comes amid a review of party funding led by Sir Hayden Phillips, and Justice Secretary Jack Straw's efforts to get all parties to agree new rules on donations.
At present, the law lets parties spend £30,000 in each constituency and candidates about £10,000 on their election campaign.
But the limit takes effect only when an election has been called, allowing backers to pour cash into seats in the months before.
Lord Ashcroft insisted last week that most of the cash in the £2million-a-year fund for marginal seats comes from other Tory donors.
Tory Michael Ashcroft is worth an estimated £1billion after selling security firm AD T for £3.7billion in 1997. He became party treasurer in 1998 and was made a peer in 2000. The former postman and pop group manager, who runs a financial business in Belize, has given the party millions.
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