Blair's peerage for his Labour fixer

Tony Blair is to spark a new cronyism row by giving a peerage to his controversial former chief fixer.

Margaret McDonagh will head a new list of Labour supporters being catapulted into the House of Lords within weeks.

The former Labour Party general secretary left her post in 2001 after being attacked for negotiating - and keeping secret - a £100,000 donation from publisher Richard Desmond soon after the Government approved his takeover of the Express group.

She was promptly given a job by Mr Desmond as general manager of his titles, although she had no previous experience of the industry and was due to leave to study business at Harvard.

Ms McDonagh, now back in Britain, refused to comment on her elevation. Asked if her name appeared on the list, she said: "If it did, it is not something I could talk about."

Nicknamed the "Ice Maiden" when in charge of Labour's former HQ at Millbank Tower, Ms McDonagh was involved in a series of controversies, including the moves to block Ken Livingstone from standing for London Mayor.

She infuriated grassroots members by parachuting favoured candidates into safe seats, including Tory defector Shaun Woodward, and tightened Mr Blair's grip on the party machine.

As a new working peer, she is being tipped for rapid promotion to the Government as a minister or a whip. Her sister Siobhain is Labour MP for Mitcham and Morden, and they are thought to be the first pair of sisters to sit in both the Commons and Lords.

The Desmond donation was Margaret McDonagh's biggest controversy. Labour MPs and ministers were furious at the decision to take money from a publisher of top-shelf magazines, and senior party officials complained Labour's specialist team in charge of high-value donations had been kept in the dark. She met Mr Desmond in 2001, weeks after his purchase of the newspapers was waved through by former trade secretary Stephen Byers.

Mr Desmond offered free advertising for the general election up to the value of £100,000 but Ms McDonagh persuaded him to write a cheque instead, and promised the money would be spent on adverts in the Express group.

The value of the donation did not appear in the party's accounts under the rules at the time, emerging later via a leak.

Had it been paid a few weeks later - or had it been a gift of free advertising during the election - new rules would have forced a full declaration to the Electoral Commission.