Galloway set to be dumped as Labour MP

George Galloway's future as a Labour MP was under serious threat after the party leadership promised to investigate damaging newspaper allegations that he took massive sums of money from Saddam Hussein's regime.

Labour appeared likely to withdraw the whip from Mr Galloway, despite his fierce denials. That would prevent him from standing as a Labour candidate at the general election if the suspension stood.

The Daily Telegraph alleged that a document it found in the Iraqi Foreign Ministry appeared to show that Mr Galloway took £375,000 a year from the Iraqi government, and had demanded even more.

Today, the newspaper claims to have a further alleged letter, from Saddam Hussein's most senior aide, conveying Saddam's personal message that a request for cash from Mr Galloway should be rejected. The letter asks officials to review the request.

Yesterday, Mr Galloway said he would be suing the newspaper over the original claims. A statement from Davenport Lyons, Mr Galloway's solicitors, said: "The allegations are totally untrue and he has decided to take whatever legal action is necessary."

Labour officials will question Mr Galloway over the claims in an inquiry into his conduct during the war. He sparked fury when he accused Tony Blair and George Bush of attacking Iraq "like wolves".

If he pursues legal action, Labour will decline to investigate the money claims further as they would be sub judice.

Mr Galloway won strong support from his Glasgow Kelvin constituency party yesterday and he said he would stand as an independent if Labour removed the whip. He told The Independent that it would be "entirely improper" for Labour to try to throw him out during a libel action.

In another development last night, a spokeswoman for the Attorney General, Lord Goldsmith, confirmed last night that he was studying separate claims that Mr Galloway had spent some of the money from his Mariam Appeal, meant to be used for treating sick Iraqi children, to fund his travel. "I can confirm that we have received a letter from a member of the public ... saying there have been allegations of misuse of funds," the spokeswoman said.

But Mr Galloway told the BBC's Newsnight that he would throw the campaign's accounts open to scrutiny.

The MP denied he had ever taken "a penny from Iraq". He said he had never knowingly met an Iraqi intelligence officer, but said he was checking his records to see who he met on Boxing Day 1999, when he is alleged to have met an Iraqi spy.