Lords watchdog rejects Blair nominees

The honours watchdog has "returned to Downing Street" the list of new peers proposed by Tony Blair.

In a major snub to the Prime Minister, the House of Lords Appointments Commission has expressed its unwillingness to approve the honours list after concerns were raised about several of Mr Blair's nominees. The list includes some high-profile Labour donors and several millionaire businessmen who supported the party's city academy schools.

The move, which amounts to a direct challenge to the Prime Minister's authority and his power of patronage, comes after an investigation into the financial and tax status of a number of peers and follows a leak of Mr Blair's list to The Independent on Sunday.

Whitehall sources say the Government has received complaints from senior Labour figures about Mr Blair's choice of peers. "The list has been returned to Downing Street. It has not been approved," said one.

The move could also pose a constitutional dilemma for the Queen, who may be ask to rubber-stamp a list of peers who have not been approved by the official scrutiny body.

The watchdog body, whose role is to vet and approve potential peers, is flexing its muscles by refusing to pass No 10's list of new working peers.