Labour has established a new committee to probe major donations but has dismissed claims that the move represents an admission of wrongdoing, sleaze or misjudgement over past cash gifts.

It comes in the wake of a series of "scandals" over major donations to the party.

The six-member committee, which will also act as Labour's fundraising body, will assess whether donors are suitable in line with a new blueprint.

But Labour Party chairman, Charles Clarke, said the new body would not sit in moral judgement on donors.

He told journalists that the key determinant would be whether the donor was acting "in accordance with the law of the land".

The committee will police donations of over £5,000 and will knock-back donations where there is a risk of a conflict of interest, Clarke said.

In future, Millbank will keep details on any links between individuals and organisations giving money and Labour politicians and staff.

Clarke said that backers must give money in the full knowledge that they will receive no advantage from the donation.

In future they must be in sympathy with "the aims and values" of the Labour Party.

Clarke denied that the decision to establish the committee was an admission that Labour had done anything wrong.

"Our fundamental view is that it is critically important that we bring funding out of the shadows," said Clarke.

He said that "media innuendo rather than proof of wrongdoing" was behind the spate of cash for access claims.

"Fundraising needs to be seen in a positive light. It sustains democracy," said Clarke.

"It represents a democratic and altruistic activity on the part of those who exercise their legal right to support financially the party of their choice."

In a financial report put before the NEC, Millbank says that a "consistent attack" on the relationship between major donors and the party had turned-off would-be business backers.

Great and Good

But party bosses were forced to reject claims that the committee, which includes the controversial millionaire Lord Levy and senior peer Baroness Jay, was simply made up of Labour's "great and good".

Lord Levy was forced onto the defensive over claims that his membership of the committee amounted to a conflict of interest.

He denied that he had ever sought donations by offering honours and insisted that no-one had ever substantiated sleaze allegations against him.

The millionaire peer and major Labour fundraiser said he had been the subject of a concerted media campaign of "innuendo and inference" in which nothing had been proved.

Jay also refused to say whether she would give her backing to a second donation from Richard Desmond, the soft-porn publisher whose £100,000 donation recently sparked controversy.

The committee, to be chaired by Clarke, will meet regularly, although its decisions need not be taken on a unanimous basis.

The full membership of the committee is: Charles Clarke, Lord Levy, Lord Evans, Baroness Jay, party chief David Triesman and former Treasurer Margaret Prosser