Iain Gray said the donation was accepted in good faith
Scottish Labour leader Iain Gray has become embroiled in a row involving one of his campaign donors.
East Lothian Council is investigating the Prestonpans Labour Party over the use of a council marquee for its annual fundraising summer barbecue.
The local party, which gave £800 to Mr Gray's leadership campaign in 2008, said it was a key community event and no previous concern had been raised.
But opposition parties claimed council cash had been used for political gain.
David Costello, chairman of the Prestonpans Labour Party, said the council historically did not charge Prestonpans organisations for the marquee, through a long-standing agreement between the local authority and Prestonpans Community Council.
"I am surprised there is concern about the annual summer barbecue we hold, it is a popular event that the community enjoy," Mr Costello said.
He added: "The council has not raised any concerns whatsoever with Prestonpans Labour Party, if they were to do so, we would be happy to discuss them with the council, as I am sure that they can be resolved to everyone's satisfaction."
The SNP and the Conservatives called for an external investigation of the arrangement, after raising concern there had been an abuse of taxpayers' resources.
A Labour spokesman said Mr Gray, who is the MSP for East Lothian, said the Scottish Labour leader accepted the donation, which was properly registered, in "good faith".
"The matter needs to be sorted out between the Prestonpans Labour Party Branch and the local council," the spokesman said.
"When that matter is dealt with, if any action needs to be taken on this donation it will be taken."
The SNP and Lib Dem-controlled East Lothian Council could decide to seeks costs going back five years from the Prestonpans Labour Party, depending on the outcome of its own investigation.