Osborne fights for political life over donation discussions

George Osborne has admitted that he took part in a conversation about the way a £50,000 donation could be made by Russia's richest Oligarch to the Conservative Party, after earlier denying it outright.

The Shadow Chancellor was fighting for his political future last night after he admitted that he had met Oleg Deripaska four times in a single weekend while staying at the Corfu villa of financier Nathaniel Rothschild in August. The hedge fund tycoon was allegedly negotiating the proposed donation.

Earlier, a clearly flustered Osborne made a public appearance outside the Tories' headquarters in Millbank (above) and denied Rothschild's claims. He said he had not solicited money from Deripaska, and no money had been taken. "We did not ask for any money, we did not receive any," he said.

Rothschild, who is an Oxford University friend of Osborne's, broke his silence over the talks via a letter to the Times yesterday. He is thought to be angry at the way the Shadow Chancellor abused his hospitality. Osborne has been seen as the source of series of malicious leaks about conversations with Peter Mandelson, the Business Secretary, while both politicians were guests of Rothschild.

Last night Rothschild named a witness who was present when Osborne and Conservative chief executive Andrew Feldman discussed a possible donation by Deripaska's company. Rothschild said James Goodwin, a former adviser to President Clinton, was privy to the conversation.

Osborne, who is likely to face more questions over the allegations today, has been backed by David Cameron. The Tory leader said the shadow chancellor had shown the "right judgement" by not asking for or taking any money.