Sarwar: NEC will conduct an inquiry into allegations against him

Labour NEC announces Sarwar inquiry

Tom Sawyer, the Labour Party's general secretary, said that a panel of three NEC senior members would conduct the inquiry. He pledged that the inquiry would "leave no stone unturned".

Earlier, the Prime Minister, Tony Blair, told the NEC that the party would take the "firmest action" if there was any wrongdoing. "People at the last election voted for different standards, so the high standards that we said we would uphold will be upheld," Mr Blair said.

The Prime Minister was backed up by Clare Short, the Secretary of State for International Development. As she arrived for the NEC meeting, Ms Short declared: "We are not having any corruption or sleaze around the Labour Party."

A Labour spokesman said that NEC members had the power to deprive Mr Sarwar of his right to represent the party at public functions if he is formally charged by the police. If charges are brought against Mr Sarwar, the Parliamentary Labour Party will be able to withdraw the whip -this is regarded as a serious disciplinary measure.

Mr Sarwar has vigorously denied the bribery charges. On Tuesday, Labour Party sources informed the BBC that Mr Sarwar had given the money to Mr Badar, but that it was received in the form of a loan and was handed over after the election.

The News of the World is sticking by its story. The paper's managing editor, Stuart Kuttner, has suggested that further details may be disclosed.

Mr Sarwar's lawyer, Chris Kelly, has advised his client not to make any further public comments. Mr Kelly said he would discuss with Mr Sarwar two other bribery claims made by Govan candidates. Jamil Abbasi and Peter Paton separately claimed that they were offered money by Mr Sarwar to stand down and that his offer was refused.

The leader of the Scottish National Party, Alex Salmond, has called for Mr Sarwar to go before the Parliamentary Commissioner for Standards, Sir Gordon Downey. Sir Gordon has recently investigated the "cash for questions" scandal, involving a number of leading Tory MPs during the last parliament.