The Labour Party is in the red to the tune of £27m following last year's general election, according to accounts submitted to the Electoral Commission.
Tony Blair changed the law amid controversy over secret loans
The Conservatives owe £18m, but have more assets than Labour.
In the year to the end of 2005, Labour lost £14.5m and the Tories £15m. Lib Dem annual losses were £207,052 but it had an overall surplus of £298,000.
The Tories and Labour said their deficits were covered by loans from supporters, at commercial rates.
Equivalent figures for the 2001 general election - which left Labour with net liabilities of £6.1m and the Tories £6.7m - reveal the extent of the financial problems facing the two main parties.
Accounts for the year to December 2005, reveal Labour spent almost £15.2m on campaigning, £23.8m on running costs, with other expenses bringing the party's total expenditure to £49.8m.
2005 losses: £14.5m
Total net liabilities: £27.25m
2005 losses: £15m
Total net liabilities: £18m
2005 losses: £207,000
Total net assets: £298,000
It had an income of £35.3m over the year, including donations totalling £13.9m and membership subscriptions of just under £3.7m.
It spent £2.06m on fundraising activities, raising £877,000 from fundraising dinners and other events in addition to the donations.
Donations from trade unions increased during 2005, party general secretary Peter Watt and treasurer Jack Dromey said in a statement.
They also confirmed that the party received £11.95m in loans, plus £2m lent by fashion magnate Richard Caring in March of this year.
Interest is being charged at 6.5%-6.75% - two points above the Bank of England rate - and had totalled £436,000 by the end of 2005, the party said.
Two of Labour's lenders have indicated the money must be repaid when the term of between 180 and 365 days comes to an end.
Others have agreed to reschedule their loans to "future periods", said the report published with the annual accounts.
Mr Watt and Mr Dromey insisted the accounts provide Labour with "a stable financial platform for the foreseeable future".
But they also revealed the party has embarked upon "an active programme of cost containment" to reduce the size of its debt.
They recorded a fall of 3,348 in Labour's membership, which stood at 198,026 members at the end of 2005.
The party said this was the smallest reduction of its kind since its records began in 1991.
Party chairman Hazel Blears said: "I think we're in a fairly challenging financial position, that's the truth of it, but obviously a party that has got substantial running costs and has fought a general election, inevitably will have spent a lot of money.
"The challenge for us now is to make sure that we continue with our membership income, our affiliations with the trade unions, our donations from our supporters and make sure we're in a good shape to fight the next set of elections."
She told BBC Radio 4's The World at One Labour was now being "completely open and transparent" about its accounts.
"I think this is in contrast with the Tories who have not revealed the names of some of the people who's lent money to them," she added.
The Conservatives spent around £15.7m on their general election campaign, out of a total expenditure for 2005 of £39.2m.
The Tories' income was £24.2m, including £13.6m in donations and membership fees of £843,000.
The party has fixed assets worth £11.5m, compared to Labour's tangible assets of £9.6m.
Meanwhile, the Liberal Democrats received an income of almost £8.6m and spent around £8.8m, of which £4.9m went on campaigning.
There was a fall in Lib Dem membership, which was down 690 on 2004 to 72,031.
The Conservatives, meanwhile, claim there has been a significant increase in the number of people joining them.
Tory chairman Francis Maude said his party had more members than its two main rivals combined, but he did not reveal precise figures.
Loans to the Conservatives totalling £8.4 million will fall due for repayment within the coming year.
"We are working towards a break-even turn-out for 2006, before taking credit for any of the loans which have been converted into donations," wrote party treasurer Lord Marland.
The accounts showed that some £235,000 worth of loans were converted into donations in 2005.