British Prime Minister Gordon Brown promised on Tuesday to return more than ?600,000 (US$1.2 million) in illegal cash gifts from businessman David Abrahams and ordered another major reform of the way the Labour Party monitors its big money donations.
With the controversy submerging other government business, the prime minister had to tackle the crisis head-on at his monthly prime ministerial press conference in Downing Street, revealing he had brought in Labour's former general secretary, Lord Whitty, to investigate the full circumstances of the gifts.
The former bishop of Oxford Lord Harries and the crossbencher Lord McCluskey will receive Whitty's report and advise the party on how to reform its procedures, the third overhaul in five years.
A Labour spokesman said no decision had been made on whether or not to publish the findings, but Brown appeared to promise that they would.
"If the inquiry names names, these names will be named," Gordon said.
"Mistakes have been made, there will have to be changes. I will take all steps to achieve these changes," he said. "We must insist on our party imposing the highest standards in future ... what happened over these donations that had not been lawfully declared is completely unacceptable."
It was clear, too, that Brown had overruled the advice of some advisers and senior Labour party figures by insisting the money be returned.
Dianne Hayter, the chair of Labour's national executive committee, had said earlier the party was "completely entitled" to the money and some officials privately counseled against sending it back overnight.
But there was criticism of Downing Street's decision to ask Harries and McCluskey to report to Harriet Harman, the Labour Party's deputy leader.
Harman was at the center of the furor on Tuesday after it emerged she had accepted ?5,000 from Janet Kidd, one of the names used by Abrahams to funnel money through to the party.
"It is truly the politics of a banana republic when the person setting up the inquiry is herself at the heart of the investigation," said Chris Grayling, the opposition work and pensions secretary.
While Brown's announcements appeared to take some of the sting from questions, Harman offered another example of what some regard as her tin ear in a crisis by delaying, until Tuesday evening, before promising to return the cash she had received for her deputy leadership campaign.
Shortly before the prime minister spoke at noon, Hilary Benn, the British environment secretary who also contested the deputy leadership, saying that he had been offered money via Kidd from Abrahams for his campaign but had refused to disguise the true source of the donation.
It emerged that Lady Jay, the former leader of the Lords, had made him aware of Abrahams' intention. After Benn refused, Abrahams made a ?5,000 donation openly.