Labour's campaigning war chest was given a £500,000 boost by supermarket billionaire Lord Sainsbury of Turville today.
His donation comes after he recently converted £2 million of loans into a gift and will further help the party prepare for the next General Election.
The money is to be used entirely for campaigning by Labour candidates, rather than meeting day-to-day bills or servicing the party's debts.
Labour was £15.8 million in the red when it last updated the Electoral Commission last month.
But officials stress that the party's debt levels have been brought down over the past year and its finances are now on a "stable footing for the long term".
Lord Sainsbury, a former minister and one of Labour's biggest financial supporters, said he had been impressed by the work of the party's general secretary, Ray Collins.
"I am giving to the party today, confident that my donation will be used where it counts, supporting the Labour Party's campaigns," he said.
"Ray Collins and the Labour Party have done a great deal to put the party on a sound financial and organisational footing in recent months and it has convinced me that now is the time to give."
The most recent financial quarter saw Labour fundraising outstripping the Tories' for the first time in more than two years.
It marked a welcome turnaround for Labour, whose debts soared to nearly £25 million as major donors dried up at the height of the "cash for honours" row.
Mr Collins, a former top official at the Unite union, became Labour's general secretary in June.
His predecessor, Peter Watt, had resigned over the proxy donations affair involving North East property developer David Abrahams.
Mr Collins today thanked Lord Sainsbury for his "generous" donation.
"The Labour Party's supporters and donors are its life-blood, and we are very grateful for Lord Sainsbury's continued support," he said.
"Every penny of this gift will help support Labour candidates, and thanks to our ongoing work to put the party on a long-term stable financial footing I can pledge the same to all supporters.
"Any donation to the Labour Party will be used only to campaign for a fair future for all."
There is continued speculation among Westminster observers about the potential for Gordon Brown to call a snap general election early next year.
However, the Prime Minister does not need to go to the country until 2010 and has emphatically stated that he is focused entirely on the economic challenges.Reuse content