Blair faces a public challenge over his peerages for 'cronies'

Tony Blair's power to award peerages to his allies is under threat from a plan by a Liberal Democrat peer to stop what he sees as cronyism in the honours system.

Lord Oakeshott has tabled a series of parliamentary questions demanding an explanation of how a Downing Street aide and ally of the Prime Minister, Sally Morgan, was granted a peerage without the permission of the new House of Lords Appointments Commission.

He is also preparing a private member's Bill to put the commission on a statutory footing so that all new peerages have to be independently scrutinised before being confirmed.

Lord Oakeshott accused Mr Blair of bypassing official channels to grant favours. "This is old patronage, new Labour. Mr Blair has said with a great fanfare that he wants to take away prime ministerial patronage but he is not abiding by his own rules," he said. "I have asked for confirmation that Blair bypassed the commission with regard to Sally Morgan."

Baroness Morgan's appointment was made directly by Mr Blair to the Queen. She is now a Cabinet Office minister responsible for women's issues.

In the questions, due to be answered next week, Lord Oakeshott asks: "Why, when and by whom it was decided not to seek the commission's approval?" and "on what basis" the Government decides whether or not to approach the commission.

The 1998 White Paper that announced plans for the commission said it would "oversee the propriety of all recommendations of political peers, so that all peers are vetted to the highest standard". The Government says new ministers who become peers have never been scrutinised by the commission.

The commission, set up by Mr Blair last year, has a duty to vet all Lords nominees to ensure that they meet "the highest standards of propriety". "The Appointments Commission is charged with vetting all those recommended for life peerages," its remit says.

In January 2000, the Royal Commission report A House for the Future (the "Wakeham" Report) recommended creating a statutory Appointments Commission with the power to nominate party political as well as non-party members.