Jack Dromey said it was crucial Labour attracted new members
Labour's finances are improving after "real progress" in reducing their substantial debts, treasurer Jack Dromey has told the party's conference.
Total debts had fallen by £11m since 2005 to £16m, Mr Dromey said, while its annual accounts were in the black last year for the first time since 2003.
Mr Dromey admitted past mistakes over funding, blaming a lack of "financial discipline and proper controls".
But he welcomed the recent £1m donation by author JK Rowling as a major boost.
The Conservatives have accused Labour of being in hock, financially, to the trade unions as the amount of income it gets from members and private benefactors has fallen.
Mr Dromey - who is married to Labour's deputy leader Harriet Harman - attacked reports suggesting Labour's finances were in such a bad state that the party might be close to bankruptcy as "scurrilous".
The party had turned the corner financially, Mr Dromey said, after making a £7.5m surplus last year and was no longer using an overdraft facility.
"The party has proved them wrong," Mr Dromey said of those who questioned its ability to fund its operations.
However, he said Labour still faced a big challenge if it was to pay for a fourth successful general election campaign, adding it was "crucial" for Labour to recruit new members.
Mr Dromey called for an end to the "arms race" in party funding and called for a cross-party consensus on new laws to cap expenditure on elections at both national and local levels.