Donor Mittal 'being considered for Blair's resignation honours list'

Tony Blair is considering honouring Britain's richest resident, who last week made a £2m donation to the Labour Party, according to Whitehall sources.

The Prime Minister is said to be debating whether to include Lakshmi Mittal in the resignation honours list when he stands down.

Mr Blair is understood to be considering names for the list which, it has now been agreed, will be vetted by the House of Lords appointments watchdog.

The Prime Minister would have the power to award a knighthood or even a peerage to Mr Mittal, who, although he has an Indian passport, would be entitled to sit in the Lords as a Commonwealth citizen.

Mr Mittal is worth around £14bn and is one of Britain's most successful businessmen and industrialists. Mr Blair is known to admire him and in 2001 he wrote to the Romanian Prime Minister to support Mr Mittal's bid to buy a state-owned steel firm.

Any award would be most likely to be given for services to business and industry, or for charitable work. Other successful business figures have also been awarded honours in recognition for their contribution to society.

Mr Mittal, a long-standing Labour supporter, donated £125,000 to the party's 2001 election campaign.

Labour confirmed last week that he had given £2m to the party. That deal was brokered by Mr Blair's chief fundraiser, Lord Levy, who was arrested last year by Metropolitan Police investigating cash for honours.

One Whitehall source said: "Mittal is held in very high regard by Tony and it would not be surprising if his contribution to business was recognised."

Yesterday, Angus MacNeil, the SNP MP who triggered the cash-for-peerages investigation, said the public would be dismayed if another major Labour donor were to be honoured by Mr Blair.

Four major donors were nominated to the Lords by Mr Blair for the last list but their names were withdrawn after this paper broke the news of the "cash-for-honours" inquiry.

"It would show utter contempt for the public if Tony Blair was to honour another Labour donor in his resignation list," Mr MacNeil said.

Mr Mittal has come to Labour's rescue at a time of serious financial trouble for the party.