A seven figure cash donation to the Labour Party is set to ease its current financial plight.

The party, £6 million in the red following the purchase of a new Westminster office, will use the donation from Lady Hamlyn to help pay off its mortgage.

In an interview with Friday's Times, chief fundraiser Lord Levy said this was Lady Hamlyn's only request, other than that a plaque be erected in their Old Queen Street building to commemorate her late husband, who himself donated £2 million to the party.

The peer defended big money donations to political parties, saying that writing out a cheque was a way for someone "to express their belief in a political party".

Lord Levy hinted that more "serious money" donations would be announced in the coming months.

Labour has become increasingly reliant on large private donations having seen its ordinary membership fall since a peak in 1997 and trade union sponsors divert their cash towards other campaigns.

Lord Levy said that "there is now an urgent need for funds" for the party", adding that he feels "very positive that we can raise some serious money".

He also expressed his concern that big money supporters were "beaten up" in the media, discouraging others from donating.

Lady Hamlyn's donation is the first above £1 million that Labour has received in over a year.