The Labour Party will not allow its "historic links" with trade unions to be broken by changes to party funding, Jack Straw has said.
Mr Straw said Labour's link with the unions was 'enduring'
A proposed £50,000 cap on donations, which threatened the link, would be resisted, said the Commons leader.
But he also said parties should spend less on slick election campaigns and get back to "meaningful" debate.
It came as Tory chairman Francis Maude said union funding for Labour always came "with a price tag" of demands.
The three main parties are under pressure to come up with a new formula for party funding after allegations of corruption.
In a speech in his Blackburn constituency on Friday, Mr Straw said the way to end the party spending "arms race" was to cap spending levels all year round - not just in the run up to elections.
"As more money has been spent on campaigning, one of the downsides has been to lose the personal touch which is so vital to effective politics."
But he also had strong words for those - including the Conservatives - who have called for an end to Labour's links with the unions, which have traditionally provided the majority of the party's funding.
"Those who wish to see our party's historic links with the trade unions disappear into the mist in this process will be disappointed. The link is historic, enduring and entirely justified."
The Commons leader also urged an end to slick marketing campaigns, which swallow millions at election time.
He said politicians needed to get back to "face-to-face debate" rather than "slick campaign techniques which only alienate the public and fuel suspicion in politics."
Tory chairman Francis Maude earlier repeated his call for an end to Labour's union links.
He said Gordon Brown - the man widely expected to take over as Labour leader from Tony Blair later this year - could not afford to hold an election without union funding.
"If Brown wanted an election in May or October of this year, he can click his fingers and the unions will come running", Mr Maude told Tory Radio.
But, added Mr Maude, "the Danegeld doesn't come without a price tag. The union tanks will be all over Gordon Brown's lawn".
Sir Hayden Phillips was asked by Tony Blair to examine whether agreement could be reached over changes to party funding.
It followed allegations, denied by all concerned, that honours have been given to people in return for people lending money to political parties.
He is due to report back by the end of January. But in a memorandum seen by the BBC, Sir Hayden suggests a £500,000 limit on donations from organisations - including trade unions - falling to £50,000 in four years.
It would effectively cut off most of the funding Labour receives from the unions.
In a letter to Sir Hayden last month, former minister Stephen Byers - a Blairite Labour MP - said even to a moderniser like him, the proposal was unworkable.
It followed anger among some Labour MPs over suggestions Mr Blair would back the draft proposal.