LONDON - British Prime Minister Tony Blair promised on Thursday to change party funding rules in a bid to quell a growing sleaze row and dismissed charges he had lost control of his Labour lawmakers after a revolt.
Blair had to rely on votes from the opposition Conservative Party to get his flagship school reforms bill past a key parliamentary hurdle on Wednesday evening -- a damaging result that was compounded by a new cash-for-favours spat.
Blair's authority has ebbed since his majority was more than halved at last year's election and since he said he would not stand in the next poll, due by mid-2010.
The sleaze row is a blow to the image of a prime minister who promised to clean up politics when he came to power in 1997 and whose popularity has suffered since the war in Iraq.
Labour treasurer Jack Dromey has opened an inquiry into loans to the party of millions of pounds about which he was not informed. The lenders were offered seats in the upper house of parliament, the House of Lords, known as peerages.
Blair denied he had given peerages in return for cash but said party funding rules should be revised and suggested naming an independent figure to review the process.
He said he would no longer personally nominate people to receive titles under Britain's honours system but would still take part in the process of nominating peers -- the root of the current scandal.
"Anyone appointed should merit appointment independently of financial support," he told reporters at his monthly news conference. "I'm completely satisfied there's been no breach whatsoever of the rules."
It is not the first time Blair's party has been dogged by cash-for-favours rows. Peter Mandelson, now EU Trade Commissioner, twice quit cabinet posts under Blair because of financial scandals, first in 1998 and then in 2001.
Pressing On with Reforms
At his news conference, Blair vowed to press ahead with reforms to schools, hospitals and other services, even though they will anger some sections of the Labour Party.
The fact that Blair could not muster enough Labour votes to pass a bill that is central to his third term agenda gives more ammunition to those who want a swift handover to his expected successor, Chancellor of the Exchequer Gordon Brown.
But Blair promised to "engage" with his critics in a bid to avoid clashes in future.
"I'm passionately committed to those reforms," he said, adding that he and his ministers would debate the issues across the country in the coming months.
Blair has a working majority of 69 but the education bill, which aims to give schools more freedom, passed only thanks to Conservative votes because 52 Labour lawmakers rebelled.
Left-wing Labour lawmakers called the vote a watershed, saying Blair had lost his moral authority to lead the party. Analysts said the result, while not a killer blow, was damaging.
Blair has also been defeated in key votes on anti-terrorism plans and religious hatred laws since the election last year.
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