Charles Kennedy has criticised Labour's "dodgy deal" to allow Ken Livingstone back into the Labour Party.

The Liberal Democrat leader tackled the prime minister on the issue following Tuesday's decision that cleared the way for the mayor to run as Labour's candidate during elections later this year.

Kennedy described it as a "dodgy deal" and claimed Livingstone and Blair had sold their souls.

"Does the prime minister anticipate that Labour's endorsement of Ken Livingstone for London mayor will be more successful that Ken Livingstone's endorsement of Labour in the Brent East by-election?" he asked.

The prime minister said London's voters would decide the issue.

"We will all have our candidates and we will see who wins," said Blair.

The decision to readmit Livingstone was announced by Labour's National Executive Committee on Tuesday afternoon.

He was originally suspended by the party for five years after deciding to run as an independent candidate in the 2000 London mayoral election.

The positive decision cleared the way for a final vote of London party members on whether he should be Labour's mayoral candidate.

Nicky Gavron, who had been Labour's alternative candidate if Livingstone had not been readmitted, had welcomed the decision.

"This is absolutely the right decision by the NEC. It is right for London and good for Labour," she said.

"I now hope that Ken can be quickly adopted as Labour's official candidate and that we can move forward with a united and strengthened campaign."

Polls suggest that Livingstone is the most likely candidate to win the June poll, but the Conservatives have attacked both Labour and Livingstone for the "stitch up".

"This is just a cynical deal and a total stitch up for Londoners," said Tory mayoral candidate Steve Norris.

"But this is a great New Year's gift for my campaign as the polls show Livingstone will do worse under New Labour than as an independent.

"This begs the question as to what price is he paying and what polices he is jettisoning in exchange for his party membership card.

"We already know that part of the deal is that New Labour will write his manifesto - so much for Ken's principles."