Wendy Alexander must seriously consider her position as Scottish Labour leader, a former standards watchdog has said.
Sir Alistair Graham told BBC Scotland that Ms Alexander should think about stepping back from the job while working to clear her name.
Ms Alexander's leadership campaign team admitted accepting an illegal donation from a Jersey-based businessman.
The MSP has rejected any suggestion of "intentional wrongdoing" and said she was confident of being cleared.
Meanwhile, rival politicians have continued to call on Ms Alexander to step down as leader over the £950 donation from Paul Green, which broke the rules because it came from someone who was not a UK voter.
Sir Alistair, the former chairman of the Committee on Standards in Public Life, said it was surprising that somebody of Ms Alexander's experience had run foul of the regulations and "clearly wasn't aware of the detailed rules".
He told BBC Scotland: "To head up the Labour Party in Scotland is a very substantial job.
"Normally, when people face the danger - and I presume she does face the danger here of a criminal prosecution - then normally you step aside from your position so you can concentrate on clearing your name."
Sir Alistair said Ms Alexander had to make her own choices, but added that it was always better to do the right thing quickly, "rather than be pushed by circumstances".
He added: "I think she should consider her position very seriously, but it is a matter for her own personal judgement in the end about whether she retained the confidence of the people who elected her.
"Secondly, if she's going to concentrate on clearing her name, and I've seen some reports to say she's confident of doing that, then she should surely step aside while she concentrates on that task and let somebody else concentrate on the major task of representing the Labour Party in the Scottish Parliament."
In a separate development, two Labour peers who donated money to Ms Alexander's leadership campaign have made complaints to the police, after their actions were publicly revealed in the Sunday Herald newspaper.
Baroness Adams and Lord Maxton said that, having donated less than £1,000, they should have been able to remain anonymous under electoral law.
The Electoral Commission watchdog has already been in contact with Ms Alexander, looking for details of all the donations made to her campaign fund.
SNP deputy leader and Scottish Deputy First Minister Nicola Sturgeon said Ms Alexander had lost "all credibility" and that her position appeared untenable.
"The only reason Ms Alexander is staying in post is to act as a human shield for Gordon Brown whose sole priority is not her interests or Scottish Labour; it's to prevent the house of cards collapsing down south," she said.
Liberal Democrat MSP Mike Rumbles and former convener of the Scottish Parliament's Standards Committee said that it was not acceptable for Ms Alexander "to claim that they cannot disclose the details of their donations because of the Electoral Commission inquiry".
He added: "The public are rightly demanding openness and transparency from the Labour Party and nothing but full disclosure will do."
Jackie Baillie, a member of Ms Alexander's campaign team, insisted the Labour leader did not understand that the donation was illegal.
"She is showing incredible strength of character and a determination to see this matter to a conclusion," Ms Baillie told BBC Scotland.
"I am confident she will be exonerated of any intentional wrongdoing."
Ms Alexander, who became Scottish Labour leader in September, said in a statement at the weekend: "I deeply regret the damage which recent publicity has brought to the Labour Party.
"However, I reject any suggestion of intentional wrongdoing on my part."
The prime minister has vowed to give his backing to the "fullest possible investigation" into Labour funding.
The Prime Minister has said he was "ready to assist" any police probe, amid an investigation into gifts to UK Labour of more than £650,000, which businessman David Abrahams made using proxy donors.