THREE former Labour Party treasurers will not face charges over proxy donations to the party, the Crown Prosecution Service said today.

The investigation has lasted almost 18 months since it first emerged that property developer David Abrahams donated cash to the Labour Party via associates.

The proxy arrangement was designed to get around the law requiring political donors to be declared under the Political Parties, Elections and Referendums Act 2000.

But the revelation created an outcry that led to the resignation of Peter Watt, then general secretary of the Labour Party, when it emerged he knew of the arrangement.

Scotland Yard was called in by the Electoral Commission in November 2007 and handed over its files to the Crown Prosecution Service last June.

In a statement, Labour said it was still making arrangements for the repayment of the Abrahams donations.

"The Labour Party has always taken the view that we should be beyond reproach with regard to accepting and reporting donations and we are the party that has reformed the area of political donations to increase transparency and accountability.

"The Labour Party notes that this matter has been concluded and that it has been made clear that no one sought to break any rules.

"The Labour Party put aside the donations in question in 2007 and will now seek advice about the best way to repay these donations.

"There has already been an internal inquiry and the comprehensive corporate governance procedures that have been recommended have been put in place."

The Electoral Commission said the CPS had found the donations register had been incorrectly completed but could not collate enough evidence to charge anybody.

"The law requires that political parties and politicians report the source of donations to ensure transparency and integrity in party funding," it said in a statement.

"This is vital to public confidence in the democratic process.

"In this case, following discussion with the Metropolitan Police Service and the CPS, we referred the matter to the police because there was evidence that an offence may have been committed.

"The police decided to conduct an investigation, and passed the evidence to the Crown Prosecution Service.

The CPS has concluded that the donation reports in question incorrectly identified the donor but there is insufficient evidence to charge anyone with any offences.

"The decision on whether or not to bring a prosecution is a matter for the CPS."