Michael Ashcroft, the Conservatives' controversial treasurer, is believed to have secured a peerage after heavy lobbying by William Hague, the party leader. He is expected to be named in a list of working peers announced tomorrow.
The businessman, who has an offshore fortune based in Belize and has donated over £3m to the Tories, was denied a peerage last year when he became the focus of a storm over foreign funding of political parties, causing deep embarrassment for Mr Hague. The inclusion of his name on the latest Tory list has handed Labour a political stick with which to beat the Opposition.
Other Tories on Mr Hague's list are expected to include his chief of staff, Sebastian Coe, the former Olympic gold medallist and world record holder.
Mr Ashcroft, who has a house in Westminster, said when he reached an out of court settlement with The Times over a libel action that he would relocate his business interests to London and pay taxes in Britain. He is likely to take more than a year to move his business, but Mr Hague is understood to have succeeded in persuading the political honours scrutiny committee that he would be suitable anyway.
Labour MPs have demanded that Mr Ashcroft should give up his role as Belize's ambassador to the UN before he becomes a life peer. Mr Ashcroft's donations to the Tory party, which included short-term loans of up to £2m last year, will also raise questions about "gongs for cash".
Tony Blair is expected to announce 19 new Labour working peers, with four Tories and nine Liberal Democrats. Charles Kennedy, the Liberal Democrat leader, is expected to include the former SDP whip John Roper in his list, but most Liberal Democrat peers will be drawn from an active members' list under new party rules binding the hands of the leader.
Mr Blair will announce a further list of about 20 Labour peers before the election to bring Labour's total strength in the Lords close to the Tories in an attempt to end the series of defeats inflicted on the Government in the Upper House.
The working list of peers was delayed because of difficulties in Labour finding the right candidates, who would be prepared to give up time from their present work to support the Government in the reformed House of Lords.
Mr Blair and the Leader of the Lords, Baroness Jay of Paddington, have been embarrassed to find that despite removing most of the hereditary peers, they still cannot command a majority in the Lords.
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