Downing Street has played down a reported rift between Gordon Brown and Harriet Harman over proxy donations.
Peter Watt and David Abrahams at a dinner earlier this year
It follows revelations about the way Ms Harman's successful campaign for Labour's deputy leadership was funded.
Her team accepted £5,000 from a donor linked to businessman David Abrahams on the recommendation of Mr Brown's aides.
Police have launched an investigation into all of Mr Abrahams' covert donations to Labour dating back four years and totalling more than £650,000.
But - in a separate development - the Electoral Commission has asked Ms Harman to explain how she paid for her campaign after BBC Newsnight revealed substantial loans were taken out.
Any such loan should be reported to the Electoral Commission within 30 days. Only one loan, an overdraft facility for £10,000 taken out in October last year has so far been reported.
Even though the contest ended in June, the Harman campaign is still trying to raise money to repay the loans, BBC Newsnight's David Grossman reports.
Downing Street has insisted Mr Brown knew nothing about the funding arrangement with Mr Abrahams, which saw the businessman give cash to the party through four proxies.
Mr Brown has said all the money paid out by Mr Abrahams will be returned, as the donations were unlawful and "completely unacceptable".
Ms Harman earlier appeared to implicate Mr Brown in the affair by revealing his former leadership campaign manager, Chris Leslie, had suggested one of Mr Abrahams' intermediaries, Janet Kidd, as a possible donor.
Asked earlier if she had "dropped Gordon Brown in it," she replied: "No, absolutely not.
"I strongly maintain I have complied with the letter and spirit of the law and I think Gordon Brown has done the same."
Downing Street has also sought to play down reports of a Cabinet rift over the donations.
Mr Brown's official spokeswoman said: "The prime minister is fully focused on the business of government and has made clear he is keen that all the issues regarding party political donations are investigated thoroughly."
Justice Secretary Jack Straw said: "Far from there being any chasm, there is not an inch between them."
Mr Straw, who ran Mr Brown's leadership campaign, insisted it had cost less than expected because he was unopposed.
And he said Chris Leslie had been unaware that Mrs Kidd was not the source of the money when he put her name forward as a potential donor for Ms Harman.
Mr Straw voiced his frustration that another controversy had emerged so soon after the cash-for-honours affair.
And he accepted that there were questions to be asked of Tony Blair, because many of the donations were made when he was prime minister.
"It's absolutely true that this seems to go back for about four years," said Mr Straw.
"And frankly one of the reasons why all of us are irritated to distraction by what's happened is that we assumed that these historic problems had been sorted out with all the additional controls that were put in place following the so-called cash-for-honours issue."
Mr Straw said the latest scandal was "distracting beyond belief" for Mr Brown, who was a man of "astonishing rectitude".
Earlier, Mr Straw insisted "99.9%" of people in the Labour Party - including both Mr Brown and himself - knew nothing about the secret donations.
He told BBC Radio 4's Today programme the situation was "mind-blowing".
Mr Abrahams has said he did not know he was breaking any rules when he made the donations by proxy, claiming that he kept them secret to avoid publicity.
Labour's general secretary Peter Watt has already resigned, saying he knew about Mr Abrahams' funding arrangement, but did not think they had broken the rules.
Labour's chief fundraiser, Jon Mendelsohn, has said Mr Watt told him about the situation last month but had been unhappy about it and had contacted Mr Abrahams with the intention of putting his donations on a proper footing.