The Neill Committee will advise the Prime Minister in its report in October on party funding that the remit of the political honours scrutiny committee should be extended to cover all honours. It could cover the so-called Labour "luvvies" for the first time.
The committee, chaired by former Tory Cabinet minister Lord Pym, would be allowed to scrutinise those nominated for services to business, the arts and other areas of commercial life which are not at present covered by the committee.
Mr Blair abolished political honours when he came into office last year as part of the attempts to clean up public life.
The Government is almost certain to accept the recommendations, which were suggested in evidence to the Neill inquiry by Lord Pym's committee, and could be used to answer the allegations that Mr Blair was favouring supporters of the Labour Party with honours.
The allegations of cronyism were made by the Tories after the publication of Labour's annual report showing a third of those who gave donations of more than pounds 5,000 to party funds were later given honours or jobs.
The donors included Lord Hamlyn, the publisher and founder of Octopus, who was awarded a life peerage in the New Year's Honours List. He has given an estimated pounds 500,000 to the Labour Party.
Others who got peerages after making big donations included Melvyn Bragg, the BBC presenter, writer Ruth Rendell, and Lord Sainsbury, head of the supermarket chain, who gave an estimated pounds 3 million.
Others who gave money and got appointments to public bodies or task forces included television executive Greg Dyke and computer entrepreneur Alan Sugar, who was made a youth enterprise adviser.
Barbara Roche, a duty Government minister, denied any hint of impropriety in the honours or jobs for donors. "Appointments are only made on merit," she said.
But a Tory spokesman said: "Our charge is one of cronyism at the heart of Government. The names read like an invitation list to cocktail parties at Number Ten."
Pete Townshend of the Who, singer Lisa Stansfield and Mick Hucknall of Simply Red are named among the major donors to Labour in the annual report which shows that the party slumped to a record deficit of pounds 4.5million after the election.
The party says it regards sponsorship as "wholly different" from political donations, but the sponsors who paid more than pounds 5,000 included GJW, the lobby company which sacked disgraced Labour insider Derek Draper after his claims that he had close access to ministers.
Big donors included comedians Ben Elton and Eddie Izzard, actors Sinead Cusack and Jeremy Irons, Manchester United boss Alex Ferguson and bookseller Tim Waterstone.
All are named along with unions and some companies under Labour's new code of ethics to disclose all donations of more than pounds 5,000.
It does not say how much they donated but the pounds 1 million donated and returned to Bernie Ecclestone appears in the accounts.
The report, published yesterday, will strengthen Labour's demand in the Neill committee report for a pounds 15 million cap to be put on party expenditure at elections .
It says that spending on elections is now "out of hand" and must be capped to be brought under control. The cost of the general election was pounds 13.7 million, bringing Labour's total election expenditure over three years to pounds 26 million.
Publisher, Sixties hippie, defendant in the 1971 Oz trial, made his money in computer magazines and owns, among other homes, David Bowie's former pad in Mustique.
Chairman of Channel 5, best known for reviving the fortunes of his previous employer, TV-am, by enlisting the services of Roland Rat. Has not looked back since.
Owner of United News and Media, currently engaged in costly campaign to convert Express newspaper from dyed-in-the-wool Tory organ to touchy- feely Labour vehicle.
Of the supermarket dynasty, is one of the country's richest men and one of Labour's biggest personal donors - reportedly having given pounds 3m over three years.
Soul diva from Rochdale, once told the former Tory prime minister, John Major, to get lost when he asked to see her backstage. Puts saving the NHS as her top priority.
Rock star with one of the toughest assignments in showbusiness: devising a performance that will fill the 6,000-seat arena at the heart of the Millennium Dome.
Chief executive of Reed Executive recruitment agency. Has been asked to turn his skills to the teacher shortage, and is also piloting the welfare-to-work scheme.
The crime-writer and founder of the party's fundraising 1000 club; has been an assiduous Labour peer with one of the best voting records since her elevation to the Lords.
Sir Cameron Mackintosh
Theatre impresario, producer of Cats, Les Miserables and Phantom of the Opera, recognised theatre could be a global event and made a pounds 350m fortune
East End entrepreneur and chairman of the Amstrad computer-to- hi fi firm whose cut-throat style made him a millionaire, and brought him the chairmanship of Tottenham Hotspur.Reuse content