LONDON - London's Metropolitan Police is set to begin its investigation into secret donations to the Labour Party on Friday as a poll suggested the scandal was hurting Prime Minister Gordon Brown's popularity.
Scotland Yard has been asked to take over the inquiry into revelations that property developer David Abrahams, a millionaire tycoon, had channelled 600,000 pounds to Brown's Labour Party through intermediaries.
The news comes as a poll put the Conservative Party 11 points ahead of Labour, its biggest lead since Margaret Thatcher was at her most popular.
Electoral laws require those making donations on behalf of others to give details of the source of the money and Brown has said that the money from Abrahams had not been lawfully declared and would be returned.
Abrahams said he didn't realise that using middlemen to donate to Labour was against the law and that he had merely wanted to avoid publicity.
However, Labour's general secretary Peter Watt resigned on Monday after admitting he knew Abrahams had donated through associates.
On Wednesday, the Electoral Commission, parliament's watchdog for political funding, said it had referred the matter to police after discussions with detectives and prosecutors.
Officers will launch their inquiry after receiving their report and Detective Chief Superintendent Nigel Mawer has been put in charge of the inquiry, police said.
A number of senior Labour figures have become embroiled in the row since it erupted.
Labour deputy leader Harriet Harman has said she acted in "good faith" in accepting a 5,000-pound donation from property developer David Abrahams through a go-between.
"We acted at all times within both the letter and the spirit of the law," said Harman, leader of the House of Commons.
On Wednesday, Work and Pensions Secretary Peter Hain admitted he had failed to register a 5,000 pound donation from Labour's chief fundraiser because of an administrative error.
Opposition parties have leapt on this week's news saying that voters would think the government was "sleazy".
"The public knows sleaze when they see it, the people know spin when they hear it and the voters will know what to do when they have their say, said Theresa May, the Conservative shadow Leader of the House of Commons.
"They will get rid of this sleazy Labour government."
A YouGov poll in the Daily Telegraph indicated the scandal was hitting Brown's popularity, putting the Conservatives on 43 percent and Labour on 32 percent, echoing other recent surveys which have seen the government's lead eroded.
The scandal is the latest in a series of setbacks for Brown who has also presided over the Northern Rock disaster -- the first run on a bank in Britain in more than a century -- and news last week the government has lost computer discs containing the personal details of 25 million people.
Brown had enjoyed a significant advantage over the Tories after taking over from Tony Blair in June and the Telegraph said he had been 11 points ahead in a similar YouGov poll just two months ago.
