The cash for access row has been reignited after it emerged that Labour received a donation of £50,000 from a wealthy businessman just weeks before awarding a £32 million contract to his firm.

Individual donations - including a second £50,000 donation from vaccine company Powderject's chief executive Dr Paul Drayson - have sent Labour to the top of the political funding league in the first quarter of this year

Millbank raised £3,379,641 in the first quarter of 2002, with nearly £2.5 million coming from individual donors.

The Conservatives raised £2,710,327 and the Liberal Democrats trailed the main two parties on just £236,482.

Dr Drayson gave £50,000 to the party on February 8, 2002 - taking his total donations to Labour over the last year to £100,000.

He denies the donation is linked to his Powderject interests.

"I want to state categorically for the record that there has never been, nor will there ever be, any connection between my donations, which are made in a personal capacity, and my business life," he said.

"I think that it is important that we all have the freedom to support the political party of our choice. Currently, political parties rely financially on membership fees and voluntary donations.

"Therefore, I am disappointed that recent comment appears to question the integrity of those who donate to political parties."

Parliament's spending watchdog, the National Audit Office, is already investigating the awarding of a controversial £32 million smallpox vaccine contract to Dr Drayson's firm.

Tim Collins, the shadow cabinet office minister, says the donation makes Dr Drayson "one of Labour's most generous donors since the general election" and will inevitably trigger fresh questions about his connections to the government.

"No doubt ministers will reassure us yet again that the award of the controversial smallpox vaccine contract mere weeks after this massive further donation was simply a coincidence," he told this website.

"But they cannot be surprised if more and more voters simply don't believe a word they say."

Former defence minister Peter Kilfoyle told ePolitix.com that Labour's reliance on wealthy individuals "doesn't look good".

"I don't think this is the way forward," he said. "Much criticism was levied on Labour in the past for its over reliance on trade union donations. I hardly think it is acceptable to be wholly in debt to individuals."

The Liverpool Walton MP said it was time to move to the state funding of political parties - a shift ruled out by Tony Blair just weeks ago.

"I think it is wholly unsatisfactory situation to be in and the sooner that we move to state funding of political parties the happier I'll be," said Kilfoyle.

The Liberal Democrats too have joined the chorus of disapproval with health spokesman, Dr Evan Harris, calling for reform to arrest growing public perception of wrongdoing.

"The fact that these donations coincided with the awarding of procurement contracts to donors gives the appearance of sleaze," he said.

"The perception of corruption is as corrosive to the image of politics as sleaze itself. It is yet another reason why there is a need to reformpolitical parties' funding.

"Funding for political parties should be restricted to small individual donations and proportionate state funding."

Downing Street hit back at its Conservative critics arguing that "we still don't know who, and from where, the Tories 1997 campaign was funded".

"We only know who funded their 2001 campaign because of the legislation this Labour government introduced," said Number 10.

"The Tories' hypocrisy is breathtaking and the fact that Tim Collins continues to make these baseless and unfounded allegations shows they have nothing to say on the issues that really matter to people: jobs, schools, hospitals and the fight against crime."

"It is absurd that those who give money to sustain our democratic society should be attacked by innuendo and slur. The Labour Party is proud of the broad base of its support and the goodwill of people who back democracy without personal gain."

Powderject is set to pocket up to £20 million from the deal which has attracted controversy after rival drug companies claimed they were not allowed to bid for the Department of Health contract.

Health officials had kept the Powderject contract a secret, citing interests of national security, a stance that contrasted with the US's open bidding on a £540 million smallpox contract.

The vaccine deal followed bio-terror scares in the aftermath of September 11, providing smallpox shots at £2 a shot for 16 million people.

Lord Sainsbury topped the individual donations giving another £2 million to Labour.

Other large donors included Sir Ronald Cohen, who gave £200,000, and Sir Sigmund Sternburg, who donated £110,000.