He said the decision, already announced, to set up the commission was aimed at avoiding "any possible or perceived notion of a conflict of interest".
Replying to tough questioning from peers, the lord chancellor said he did not break any rules and would consider fundraising again.
It follows widespread criticism of Lord Irvine's fundraising role and claims that lawyers may have felt pressurised into donating money because the lord chancellor has the power to promote them to QCs or judges.
The Conservatives have accused Lord Irvine of damaging the impartiality of his office and have called on him to resign - but Downing Street has continued to give him its backing.
New commission
Lord Irvine reminded peers that the first member of a new Commission for Judicial Appointments would be in place by next month.
He said the decision, already announced, to set up the commission was aimed at avoiding "any possible or perceived notion of a conflict of interest".
Lord Irvine defended his decision to ask lawyers to donate money to Labour.
"I do not believe that I have done anything wrong, or broken any current rules.
"If I did I would be the first to apologise. I would certainly consider doing it again.
"Whether or not that would attract a furore of this kind would be a consideration I would take into account.
"I believe this furore has distracted the attention of the country from the real issues," he said.
In an age-old tradition, Lord Irvine took two paces away from his seat on the Woolsack before answering questions to demonstrate that he was stepping aside from his role as presiding officer in the Lords and was replying as a cabinet minister.
Not the first
He defended writing his letter, insisting that he was not the first lord chancellor to raise funds for his party.
"I would be very surprised if Tory lord chancellors have not attended fundraising dinners.
"The reality is people come to these dinners to meet, to see, to hear and to talk to ministers and ministers' presence is a spur to fundraising. That is reality."
But former Conservative cabinet minister Lord Howe said no previous lord chancellors had sought to raise funds directly.
'Unwritten law'
He said they had known "instinctively and intuitively" that it would have broken "an unwritten law".
The exchanges in the Lords came after Liberal Democrat peer Lord McNally had tabled a parliamentary question asking whether "the role of lord chancellor is compatible with that of a party fundraiser".
He said he was disappointed that Lord Irvine had not apologised for the affair.
The Conservatives, meanwhile, followed up the exchanges in the Lords by renewing their demands for the resignation of Lord Irvine.
'Arrogant'
"The Lord Chancellor arrogantly failed to offer any kind of apology for action that has been universally condemned," said Lord Strathclyde, the Conservative leader in the Lords.
"He showed no humility, no sense of personal responsibility or any shred of concern for the storm of criticism over the spectacle of a man responsible for promoting judges and QCs writing to candidates for those offices soliciting unlimited donations for Labour.
"His lack of judgment - on display in public today - shows why he must clearly resign."