The row over hidden donations to Labour shows there is more "transparency" in politics as a result of changes to the law, a standards watchdog says.
Labour received more than £660,000 through proxy donors
The Committee on Standards in Public Life said the 2000 Political Parties, Elections and Referendums Act, which it pushed for, was "working as intended".
The act says details of a donor making gifts through a third party must be reported to the Electoral Commission.
Labour has been hit by revelations it received £663,975 via proxy donors.
North East property developer David Abrahams gave the money under four other people's names over the course of four years.
Police are investigating the donations after this was recommended by the Electoral Commission, which was also established by the 2000 act.
The standards committee's interim chairman, Rita Donaghy, said: "The recent events concerning donations to the Labour Party show the act working as intended, to increase the transparency of donations and ensure that their source is clear."
She added: "The 2000 act means that the funding arrangements of political parties are now much more transparent and therefore susceptible to public scrutiny and challenge.
"Pro-active regulation of compliance with the act can help to pick up problems early on and perhaps avoid the law being broken."
The committee has recommended setting up a "special compliance unit" to enable the Electoral Commission "to take prompt investigative action, and other measures".
Ms Donaghy said: "The government's recent response to the report, which proposes amendments to the 2000 act to reflect some key committee recommendations, is a welcome if delayed acceptance of the need to address these issues."
Prime Minister Gordon Brown has promised to "complete the work of change" to party funding.
But Conservative leader David Cameron has said Labour must either be "utterly dysfunctional" over donations to the party or that the whole truth about them has not come out.