The Home Secretary, Jack Straw, has set out the government's plans to limit spending by political parties and impose controls on political donations.

But Conservatives complain the new rules are intended to favour the government in a future referendum and target party treasurer Michael Ashcroft.

The proposals in the Political Parties and Referendums Bill are based on the work of the Neill Committee on Standards in Public Life.

The maximum any political party contesting every seat in a general election would be permitted to spend would be £19.77m, the home secretary revealed.

Unveiling the bill, Mr Straw said: "Politics should not be about who can spend the most at a particular election."

A ban on foreign donations and a £20m limit on spending by any single political party in an electoral year are also included in his plans.

Donors giving more than £5,000 to a political party at a national level and £1,000 to a local constituency will also have to be named.

An electoral commission will be established to police the new rules.

Referendum funding formula

The bill also proposes rules for referendum campaigns, providing "modest support" from public funding for umbrella organisations campaigning on either side of the issue.

The bill sets spending limits for parties and the umbrella organisations campaigning in referendums at £5m each, but only parties that received more than 30% of the vote would be permitted to spend this amount.

The government argues that it would be impractical to try to equalise exactly the sums spent by either side of the argument.

Instead, the aim will be to try to ensure that particular parties or other organisations do not have a "disproportionate voice" simply due to the wealth at their disposal.

The measures concern Conservative Eurosceptics who fear they may be put at a disadvantage in a future referendum on joining the single European currency.

This is because up to four pro-euro parties could pool their funding while the Tories would be the only party with seats in the House of Commons to oppose it.

Tories attack Labour 'fix'

The Conservative leadership also believes the ban on foreign donations is aimed at the party's controversial treasurer and has in the past branded it a vendetta.

Mr Ashcroft has provided substantial funds to the party via his Belize Bank Trust Company.

The home secretary insists his plans were not devised around any individual.

But shadow cabinet office minister Andrew Lansley branded the bill a "fix".

"This bill is designed by Labour for that very purpose." he said.

"The government are using this bill to set up biased arrangements on referendums and a partisan attack on political donations.

"Labour know they cannot win a referendum to scrap the pound unless they fix the rules.

The position of Mr Ashcroft, who is the Tories' largest single financial backer, may also be affected by another piece of legislation before the House of Commons.

The government is considering backing an amendment to the Representation of the People Act to limit the time Britons based overseas can remain on the electoral register from 20 years to five.

However, Mr Ashcroft - who is based mainly in Florida, holds joint UK and Belize nationality and is Belize's ambassador to the United Nations, recently revealed he planned to return to live in the UK in the near future.