Blair's list of new Labour peers shelved by watchdog

The UK honours watchdog has refused to approve Tony Blair's new list of peerages and launched a fresh investigation into the tax status of a number of nominees.

The move, by the House of Lords Appointments Commission, follows the revelation in The Independent on Sunday that Tony Blair has proposed several Labour Party donors for peerages.

The financial affairs of several of the proposed peers are being looked into - including their residential status in Britain. To sit in the Lords, peers have to pay tax in the UK.

The delay will prove embarrassing for Downing Street, and shows that the watchdog committee, made up of senior politicians from all parties, is flexing its muscles.

One Whitehall source described the investigation as "irritating" for the Government. "Apparently they are looking at quite a lot of the nominations and are asking questions about what their tax status is. I think we are in for a delay."

The Appointments Commission is in charge of vetting nominations "to ensure the highest standards of propriety". It also vets "individuals added to honours lists by the Prime Minister for propriety", but has no statutory power.

Several millionaire businessmen who supported Labour's "city academies" are on the list.