The BBC's Sean Brown: Derek Draper could face prosecution

The meetings followed the publication in 1996 of The Blair Revolution, which Mr Mandelson - now Minister Without Portfolio - and Mr Liddle - now a member of the Downing Street policy unit - had just written.

Mr Draper, a former adviser to Mr Mandelson, said he received the money but had done nothing wrong.

He denied making a significant profit from the meetings which he had organised to raise awareness of the book - not to make money.

"Ten thousand business people were invited to these events, which cost quite a lot to put on," said Mr Draper.

Prosecution threat

"Any profit that was made was spent on organising similar events for Labour Party members to discuss the book with Roger and Peter. At the time, I was not even a lobbyist."

Mr Mandelson backed Mr Draper, telling the BBC that the fees were to meet the costs of seminars.

Mr Draper now faces prosecution for not filing the accounts with Company's House as the law demands.

He said: "I have just been very busy and I intended to do it during the summer quiet period."

Prescott enters row

Mr Draper lost his jobs both as columnist for The Express newspaper and as a lobbyist after his claims that he had privileged access to top members of the government were published in the Observer newspaper.

Mr Liddle has rejected suggestions that he touted for business for Mr Draper's former lobbying firm.

Tape recordings of conversations between Derek Draper and Observer journalist Greg Palast have been put on the newspaper's Website.

In the first, Mr Draper is heard to boast about the depth of his contacts in Downing Street, mentioning policy advisers Liz Lloyd and Geoff Norris, during a conversation about energy policy.

Mr Draper is heard to say: "Then in No 10 there are two people, one of whom is one of my best friends, Liz Lloyd."

Meanwhile, Deputy Prime Minister John Prescott entered the row over lobbyists, saying it was "unbelievable" that the government efficiency watchdog, the Audit Commission, should have hired one of the firms in the "cash-for-access" controversy.

Ben Lucas of the firm LLM - accused in newspaper reports of promising inside information on Government policy to its clients - has a contract with the commission to provide "political monitoring".

Contract to be reviewed

Asked whether the Audit Commission needed to employ Mr Lucas, Mr Prescott said on Friday: "I wouldn't have thought so, would you?"

Speaking to journalists at the Local Government Association conference in Bournemouth, Mr Prescott asked: "Is that the most efficient use of public money?"

A spokesman for the commission said the contract with LLM, signed six weeks ago, would be reviewed next week.

Roy Hattersley on Radio 4's Today programme: Labour should not talk to lobbyists

Labour peer Roy Hattersley said Labour should reject all contacts with lobbyists.

Speaking on Radio 4's Today programme, he accused lobbyists of pretending to wield influence which they did not have.