Britain`s Brown Loses Minister in Funding Row

The investigation into Hain is the third investigation into Labour Party funding in recent years.

A senior British cabinet minister resigned on Thursday in a row over political donations, prompting fresh criticism of Gordon Brown's premiership at a time when his popularity is flagging.

Work and Pensions Secretary Peter Hain said he was leaving his post to clear his name after electoral authorities referred questions about the funding of his unsuccessful campaign to become deputy Labour Party leader to the police.

Just seven months into his premiership, Brown is already battling to boost low ratings following a crisis over the mortgage lender Northern Rock, administrative blunders and signs of a faltering economy.

The investigation into Hain is the third investigation into Labour Party funding in recent years.

The resignation means the public spotlight remains on the government's problems rather than where Brown wants it -- on policy.

Brown promoted James Purnell, a rising Labour star, from culture secretary to head the vast work and pensions department, which is critical to Labour's economic reputation. Other young faces were promoted as Brown was forced into a small reshuffle.

Hain, who was also Welsh secretary, has said his late declaration of a gift of more than 100,000 pounds ($195,000) to his unsuccessful campaign was "an innocent mistake".

"In view of the decision of the electoral commission today, I have come to the conclusion that I have no alternative but to resign," Hain said. "I severely and seriously regret the mistake in declaring donations late."

The resignation is the first since Brown succeeded Tony Blair last June, promising a fresh start after Blair's final months were overshadowed by a police investigation into allegations of illegal Labour funding. No one was charged.

AMMUNITION FOR OPPONENTS

Analysts said the affair gave Brown's critics ammunition.

"It does raise this general issue of sleaze being associated with the government once again," said Wyn Grant, politics professor at Warwick University.

Other political parties' accounts have also come under the spotlight but Labour's image has suffered the most.

Opposition parties, who have scored points against Brown in past weeks, accused the government of tawdry practices and, once again questioned his competence and decision-making skills.

David Cameron, leader of the resurgent Conservative Party, which has a strong lead in opinion polls, said Brown had held on to Hain for too long.

Labour member of parliament Ian Davidson said the issue was an embarrassment. Other Labour politicians urged Brown to reform party political finance to bring in more funding by taxpayers.

"He needs to separate himself from things that occurred before he was prime minister and make it clear ... a different era has started where money does not exchange hands," said Labour lawmaker Graham Allen.

Brown has already been hit by one Labour funding row.

Labour's general secretary resigned and police were called in to investigate last year after it emerged a property developer had given more than 600,000 pounds to the party through go-betweens in apparent violation of electoral law.

Police said they had received a file on Hain -- who first came to public attention in the 1970s as an anti-apartheid campaigner -- and that investigations would now begin.