Labour officials have been warned by the Electoral Commission that they face legal action if the party continues to miss deadlines for declaring cash donations.

The move follows meetings between the elections watchdog and party representatives over the failure to report thousands of pounds in donations in the third quarter of 2002.

Anti-sleaze legislation passed by Labour means that all donations over £5000 to main political party offices and over £1000 to constituency or local party offices must be registered.

And the commission warned Labour, along with the Green Party, it was prepared to consider legal moves if the failure to comply with the legislation continued.

"Having carefully considered the representations made by the parties, the commission considers that whilst they have failed to meet the reporting requirements of the Act, it would not be appropriate to take enforcement action on this occasion," said a statement.

"However, the parties have been advised that the Commission regards the failure to meet reporting requirements as unacceptable and that should there be any future systematic failure to comply, the Commission will consider using its enforcement powers under the Act."

Complying with the strict terms of the Political Parties, Elections and Referendums Act 2000 has proved a difficult task for all the major political parties.

Labour was late in registering £20,192, while the Liberal Democrats failed to declare £12,595.25 and Plaid Cymru overlooked £2,518.44 in donations in their declarations.

The Conservative Party also submitted a supplementary report in December 2002 detailing two donations totalling £12,500 that were omitted from their returns for the third quarter of last year.

Commission chairman Sam Younger said: "We recognise that parties have had practical problems adapting to the reporting requirements for donations, and we are currently reviewing the detail and workings of the system in PPERA.

"However, the recent failures cannot be allowed to continue if the Act is to be effective in delivering transparency."

Under the terms of the legislation, failing to submit donations reports can have serious implications.

Failure to submit a return in time is a civil offence by the party and a criminal offence by the treasurer, while a false declaration on a return is a criminal offence by the treasurer.

The Electoral Commission also released the latest date on party funding.

The final quarter of 2002 saw the Conservatives bringing in more cash than Labour, which has seen key union backers hold back on their donations.

A total of 12 parties reported donations totalling £4,554,898 for the fourth quarter.

• Conservative Party received £1,985,492

• Labour Party received £1,861,021

• Liberal Democrats received £315,028

• Co-operative Party received £116,780

• Democratic Party received £100,000

• Scottish National Party received £96,529

• Plaid Cymru received £45,016

• Green Party (England and Wales) received £12,944

• Christian People's Alliance received £7,000

• Scottish Green Party received £6,000

• Scottish Socialist Party received £5,188

• Legalise Cannabis Alliance received £3,900