Labour Party employees face fines or prison sentences if they continue to break anti-sleaze rules on the declaration of political donations, the official watchdog on party funding ruled yesterday.

The Electoral Commission criticised Labour for again failing to declare all its political donations in time for publication of its accounts.

Its latest figures revealed that the Conservatives received £1,985,492 in donations in the final quarter of last year compared with £1,861,021 for Labour.

The Liberal Democrats received £315,028.