'Lies' part of smear campaign, says Livingstone

Ken Livingstone went on the offensive over allegations about his finances, saying they were part of a Labour Party smear campaign to treat him like a "Nazi war criminal".

The former Greater London Council leader described as "a complete and deliberate lie" the suggestion he had committed a crime in making loans of £40,000 to himself from his Localaction company. He said he had been advised that the law preventing directors taking loans from their own firms only applied to public limited companies. "This is not a public company. There is nobody's else's money involved but my own, therefore there cannot be a DTI inquiry. This is the sort of coverage you get when you are a convicted Nazi war criminal who has been hiding in Britain for years, or for Fred West." Asked if he would take legal action, he said: "I could sue The Times and two years from now we would get to court. There is a much better jury than that - it is five million Londoners on May 4 and I will live with their decision."

Brian Sedgemore, Labour MP for Hackney South and Shoreditch, wrote to the Department of Trade and Industry to call for an inquiry. It confirmed there was no crime if a private firm were involved.

Labour denied orchestrating a negative campaign against Mr Livingstone but used the allegations to claim it was more evidence he could not be trusted. A spokesman said: "It was Ken who failed to declare his earnings (to Parliament). It was Ken who faces charges of breaking company law ... it's time for him to come clean."

In a move that confirms Labour's eagerness not to split the party in London, headquarters at Millbank made clear that there would be no immediate purge of members who backed Mr Livingstone's campaign. Five Labour members who signed Mr Livingstone's nomination papers will not be expelled until after next month's poll.

Robert Hughes, London Returning Officer, confirmed that Michael Newland, of the far-right British National Party, was one of 10 confirmed candidates for mayor.