The government has been cleared of impropriety following the row over a smallpox vaccine contract that was placed with a company owned by a Labour donor.

A National Audit Office report out on Wednesday found there was no link between the £100,000 Paul Drayson gave to Labour and the awarding of the contract to his PowderJect company.

The NAO found that ministers and officials were not aware of either of Drayson's two £50,000 gifts at the time the decision to award £32 million contract to the firm of which he was chief executive.

The Department of Health's explanation that PowderJect was the only company which could supply the required new cell-derived Lister strain of the vaccine within the required timescales was accepted by the government watchdog.

They did find an appearance of impropriety in that the second of Drayson's donations was made in January last year, during the tendering process.

The NAO also recommended that the department "give greater priority" to means, such as its website, to make more widely available the process of vaccine procurement and the criteria required for contract awards.

NAO chief Sir John Bourn said that although no conflict of interest had been found, the government should seek to be "more transparent" about its dealings.

"On the basis of investigation into the first procurement of smallpox vaccine by the Department of Health, we found no link between the personal donations to the Labour Party by the chief executive of PowderJect and the award to his company of the contract to supply the vaccine," he said.

"However, even where national security dictates that the Department of Health cannot follow normal procurement procedures, the department must still be as transparent as possible.

"There must be robust protocols for the special procurement procedures which are to be followed so that the department can demonstrate that it has acted properly and fairly."