The allegation concerned a donation made to Ms Liddell's Airdrie and Shotts constituency party which was not mentioned on her expense return after the 1997 general election. Labour sources suggested there was no need to mention it because it was not given during the election campaign.
Figures released by Labour yesterday showed that the MP, who has been tipped for promotion to the cabinet, spent pounds 4,572 on her campaign against a limit of pounds 7,000.
Patrick Moran, a former local party treasurer who was recently voted out of office, claimed a pounds 400 cheque from the shop workers' union Usdaw and an individual donation of pounds 10 were undeclared by Mrs Liddell's agent Karen Turnbull when the return was filed.
Last night, the Labour Party dismissed the allegation and said it was confident the police would take the matter no further.
A Labour source said: "There's no question of irregularity. The party is entirely confident there is nothing in the unfounded and minor allegations made by a single individual who has an axe to grind."
Yesterday's development was the second such embarrassment for Labour. Last week, the Labour MP for Newark, Fiona Jones, was charged under the Representation of the People Act with filing inaccurate returns on her election expenses.
Although Ms Liddell has a 15,000 majority over the Scottish National Party, her Airdrie and Shotts constituency was at the centre of controversy over allegations of sleaze in Monklands District Council. She took a strong stance against corruption.
Mrs Liddell entered Parliament in 1994 after winning the Monklands East by-election following the death of the then Labour leader John Smith. The campaign was acrimonious and marked by allegations of wrong-doing by the Monklands Council which led Labour to launch an inquiry.
Opposition politicians used the new allegation as proof that there was still internal strife among Labour members in the Monklands area. A spokesman for the Scottish National Party said: "This is an extremely serious allegation.
"Labour has been in trouble in many areas of the Central Belt throughout the last year and this may be more of the same."Reuse content