Harriet Harman has told MPs she acted "within both the letter and spirit of the law" in the row over a property developer's disguised donations.
She came under fire for accepting a £5,000 donation for her deputy leader bid from Janet Kidd, who it turns out was acting on behalf of David Abrahams.
Gordon Brown has said that donations to Labour from Mr Abrahams, given under other people's names, were not lawful.
For the Tories, Theresa May said Ms Harman was facing a "sleaze scandal".
Police probe urged
The donations row this week was prompted by the revelation that more than £650,000 in donations had been made to Labour since 2003 by Mr Abrahams under other people's names.
That breaks the rules on donations and has prompted calls from the Lib Dems and Tories for a police investigation.
Meanwhile it has emerged that Wendy Alexander's campaign for the Scottish Labour leadership also broke the rules by accepting money from a Jersey-based businessman. An MSP has resigned from Labour's front bench at Holyrood over the affair.
At Westminster, Mrs May told MPs: "The Leader of the House, the prime minister and the Labour Party treasurer are like the three wise monkeys.
"They see no evil, hear no evil, and speak no evil. Quite simply it won't wash.
"The public knows sleaze when they see it. The people know spin when they hear it. And the voters will know what to do when they have their say. They'll get rid of this sleazy Labour government."
Mr Abrahams also offered money, using Janet Kidd's name, to Gordon Brown's leadership bid and Hilary Benn and Ms Harman's deputy leadership bids.
Mr Brown refused the money as he did not know Ms Kidd, Mr Benn accepted it only when the donation was made in Mr Abrahams' name.
Ms Harman said she took "in good faith" £5,000 without knowing it was actually Mr Abrahams' money.
During her weekly grilling by MPs as Leader of the House of Commons, she was asked by Mrs May to make a Commons statement on the issue.
She said that her team accepted the money after checking Janet Kidd was on the electoral roll and that she was an established Labour Party donor.
Ms Harman told Mrs May: "You can huff and puff but you will not blow this Leader of the House down."
Both she and her deputy leadership team had "acted at all times within both the letter and the spirit of the law," she said.
She also said there would be a debate in the Commons next week on standards in public life.
Gordon Brown said on Wednesday there was not "one iota" of evidence that Ms Harman knew about the donation's true origins before Saturday.
Mr Benn has said he rejected the donation from Janet Kidd after being told by one of his team, Baroness Jay, that the money was actually from Mr Abrahams.
Mr Abrahams, who says he donated money under other people's names to protect his privacy and did not know it broke laws, then agreed to give money to Mr Benn in his own name instead.
Ms Harman's husband, Jack Dromey, who is Labour's treasurer, was asked on Wednesday if he had known that Labour had been receiving donations from Mr Abrahams under Janet Kidd and three other people's names.
He did not specifically deny that, saying instead that the donations were "absolutely wrong" and saying "complete concealment" when asked if he or his wife had known about them.
On Monday Labour's general secretary, Peter Watt, resigned after admitting he knew such donations had been made to the party in recent years. He said he did not realise there was anything wrong with the practice.
And on Wednesday it emerged that the party's chief fundraiser, Jon Mendelsohn, was told about the disguised donations last month, shortly after his appointment.
He said he was told they "fully complied with the law" but was unhappy about it and determined it would not continue, but did not tell anyone else as he wanted to sort out the matter with Mr Abrahams personally.
It is not clear if any other people in the party knew about the donations.