Close allies of David Cameron will be rewarded with peerages tomorrow when Downing Street issues a long-awaited list of more than 50 new working peers, The Independent has learned.
They include at least two donors to the Conservatives: Andrew Feldman, a close friend of Mr Cameron since his time at Oxford University and now co-chairman of the party, and Stanley Fink, a hedge fund manager who is the party's joint treasurer. Mr Fink has given the Tories £1.9m since 2003 and made further "non-cash" gifts, such as providing free flights, worth £66,000.
Mr Feldman raised the money for Mr Cameron's leadership campaign in 2005, was appointed Tory chief executive in 2008, and his company, Jayroma, has donated £55,000 to the party since 2006.
Another name on the list is General Sir Richard Dannatt, the former head of the British Army, who caused controversy last year when he became an adviser to the Tories' defence team in the run-up to the general election.
He stood down from the role after the election following criticism from other former service chiefs, who believed he should have remained politically neutral.
In his memoirs, Sir Richard accused Gordon Brown of being a "malign" presence as Chancellor who starved the military of vital funds even though the government had committed it to fight two wars at once. He accused Tony Blair of lacking the moral courage to confront Mr Brown over his failure to provide adequate funding.
Senior Tories are braced for a row over the list, which is expected to include 27 Tory, 15 Liberal Democrat and 10 Labour nominations.
Conservative sources insist it has long been normal practice for all parties to appoint senior party figures to the Lords after they have played a key role in general election campaigns. But there are fears in Tory circles that nominating donors may provoke criticism that the party is indulging in "cash for honours", the controversy that dogged the Blair government.
Another big donor, Michael Spencer, who stood down last month as the party's treasurer and has been widely tipped for a peerage, is understood not to feature on tomorrow's list, and may have to wait longer. Mr Spencer, who has given the Tories £278,000 in cash and sponsorship, sold £45m of shares in his Icap broking firm in January, weeks before they dropped in value.
On Tuesday, Mr Cameron made a surprise U-turn by accepting that two former Tory party workers recruited as civil servants, including his personal photographer, Andrew Parsons, should no longer be paid from taxpayers' funds. But the list of peers is likely to reignite claims of cronyism and undermine the Government's attempt to portray the Coalition as heralding a "new politics".
Labour's list of names is said to be less controversial. Ed Miliband, the party's leader, has broken with tradition by denying some former cabinet ministers the peerages they would normally expect. Some are believed to have been promised them by Gordon Brown, the former prime minister.
Among those who will miss out is Geoff Hoon, the former defence secretary. He and his former cabinet colleagues Patricia Hewitt and Stephen Byers were filmed by an undercover reporter before the election in May discussing work as lobbyists after leaving the Commons. Instead, Mr Miliband is expected to nominate people closely associated with his project to modernise Labour, dubbed "Generation Ed".
He has written to Mr Cameron expressing concern about the number of peers to be allowed to each party, and accusing the Government of packing the second chamber with Tory and Liberal Democrat members.
At present, there are 234 Labour peers, 193 Tories, 79 Liberal Democrats and 181 independent crossbenchers. Tomorrow's appointments will make it easier for the Government to avoid defeats in the Lords.
In their Coalition Agreement in May, the Tories and Liberal Democrats said that before the Lords becomes a wholly or mainly elected second chamber, appointments would aim to create a House "reflective of the share of the vote secured by the political parties at the last general election".
Critics believe the move is unfair and a departure from past practice. They point out that Labour did not become the largest party in the Lords until 2005, after accepting the principle that any change in the balance of power should be gradual.
The new peers
A successful hedge-fund manager and the Tory party's joint treasurer, Mr Fink once temporarily lost the ability to speak following a brain tumour. He is also a major philanthropist.
One of David Cameron's closest friends, Mr Feldman was instrumental in fundraising for Mr Cameron's 2005 Tory leadership bid. He is currently co-chairman of the party.
Sir Richard Dannatt
The former head of the British Army was accused of dabbling in politics when he became an adviser to the Tories' defence team and called Gordon Brown a 'malign' influence.