Labour calls for a watchdog inquiry into Lord Ashcroft were denied today as Tory leader David Cameron faced questions over what he knew of his party deputy chairman's tax status.
The peer, who has given millions of pounds to bankroll Tory campaigning in marginal seats, revealed yesterday after years of speculation that he was non-domiciled for tax purposes.
Labour accused him of breaching assurances he gave in 2000 as a condition of receiving his peerage and Lord Mandelson asked the House of Lords Appointment Commission to investigate.
But although the Commission said it would "consider" the Business Secretary's letter, it said it had no powers to investigate as the peerage was vetted before it was set up.
Under rules in place now, the watchdog will not even consider applications for "non doms" to take a seat in the upper chamber, it also pointed out in a statement.
The Conservative Party has so far declined to say how long Mr Cameron knew the peer was not paying tax on his overseas earnings.
The party leader said yesterday that he hoped the disclosure would allow him to "get on" with the election after months of persistent questions over Lord Ashcroft.
He and other senior Conservatives sought to turn the tables on the other parties, who have also received money from "non-doms", and urged the media to put the same pressure on them.
But Justice Secretary Jack Straw accused them of "concealing the truth" for 10 years while Lord Ashcroft was trying to "buy the election".
"He was only granted his peerage on the basis that he would return to live in the UK, become fully resident, and that he would pay tax in the UK on his wider income," he said.
"Lord Ashcroft has been forced to admit that he has not complied with this promise and that for the last 10 years the Conservatives have been concealing the truth."
Shadow schools secretary Michael Gove was challenged over why a senior colleague was reproved by the Tory leadership last month after saying that Lord Ashcroft was a "non dom".
Shadow Commons leader Sir George Young was said at the time to have "mis-spoken", despite being correct in what he told Newsnight.
Mr Gove told BBC2's Newsnight that "none of us knew at the time what the precise details of Michael Ashcroft's tax status was, because it's a private matter".
And he urged the broadcaster to "press the other parties as hard as you have legitimately pressed the Conservatives on this issue" or risk facing questions of breaching its own duties.
Lord Mandelson wrote to the Commission last night, asking it "in the public interest - to shine a light on this issue and to investigate whether Lord Ashcroft is currently satisfying the conditions that he was required to meet in order to be appointed to the House of Lords".
The Commission said it had received the letter and "will consider it".
"The vetting of Lord Ashcroft, however, took place before the Commission was established in 2000 and the Commission has no documentation on this case and no retrospective powers to investigate.
"The Commission will now only vet individuals who are already resident in the UK for tax purposes and commit to remaining so."
Lord Ashcroft has been central to the policy of targeting marginal seats which, if successful, could see Mr Cameron in Downing Street.
He has made donations worth more than £4 million through Bearwood Corporate Services since Mr Cameron became leader in 2005.
These gifts are the subject of an Electoral Commission investigation into claims that the UK-registered company is not carrying out business in Britain and is therefore ineligible to donate.
The peer made clear he was ready to pay full UK tax if the law is changed to bar non-doms from membership of the upper house, saying: "I agree with this change and expect to be sitting in the House of Lords for many years to come."
Government legislation introducing a ban is set to clear its final Commons hurdle today, with Conservative support.
The Conservatives pointed out that Labour too was funded by some "non-doms", including Lord Paul.
But Lord Paul said it was "really ridiculous" to compare his case with that of Lord Ashcroft, as he had always been open about his tax status.
Lord Mandelson told reporters in Downing Street later that it was "unacceptable" for the Appointments Commission to refuse to take the matter further.
"It's not acceptable for the authorities simply to say 'Well, we're an independent commission now, we don't have the papers'," he said.
The Cabinet minister said Lord Ashcroft had been "operating in the dark" for far too long.
"Now we know that Ashcroft has dodged the basis on which he was given his peerage in the first place, and both he and the Conservative leadership have dodged the truth about that for 10 years," he added.
He also questioned why Lord Ashcroft was only pledging to give up his non-dom status if the Tories came to power.
"Why does the Conservatives winning the election determine whether or not he does the right thing by Parliament and the undertaking he originally gave?" he said.
Lord Mandelson said the episode showed "how little" the Tories had changed, despite what David Cameron claimed in his spring conference speech at the weekend.
And he insisted that the party should now give up the cash that had been donated by Lord Ashcroft.
"All these years he has been dodging what he should have paid in tax in full on the basis of the original agreement he made with the authorities," he said. "Instead he has chosen to give all that money to the Conservative Party.
"Perhaps they would like to pay that money back now."