BREAKTHROUGH; Blair questioned by Christmas as cash for honours police close in.

Byline: By BOB ROBERTS Deputy Political Editor

TONY Blair was yesterday warned that police have made "major developments" in the cash-for-honours inquiry.

The corruption investigation has unearthed "significant and valuable material", Scotland Yard Assistant Commissioner John Yates, who is leading the inquiry, told MPs.

He now hopes to be able to wrap up the case and send a file to the Crown Prosecution Service by January next year.

The breakthrough raises the prospect of senior Labour figures, including Mr Blair, facing charges. It also means the Prime Minister is virtually certain to be questioned by detectives before the end of the year.

But Labour Party sources hit back yesterday accusing police of "playing to the gallery".

Mr Yates updated MPs in a letter to the public administration committee, dated November 13. He said his team had interviewed 90 people so far - 35 from the Labour Party, 29 Conservatives, four Liberal Democrats, and 22 non-party members.

Labour chief fundraiser Lord Levy has been arrested and interviewed twice.

Mr Yates added: "Considerable progress continues to be made. The investigative team have and continue to adopt a thorough, methodical and impartial approach to the investigation. This has resulted in the acquisition of significant and valuable material."

He also rejected charges his team had been leaking details to the media.

He said: "This is endorsed by the fact that the major developments in this inquiry are not in the public domain."

But senior Labour sources were furious at the way the investigation is being handled. They said Mr Yates failed to get a conviction when prosecuting royal butler Paul Burrell.

One said: "No one seriously believes any charges are going to be laid after this.

"He failed to get Burrell and he is now going on fishing expeditions without much evidence in the hope of getting a big name."

The police are investigating whether places in the House of Lords were offered in exchange for secret loans to the major political parties.

All those concerned in the inquiry deny any wrongdoing. It also emerged yesterday Labour Party chairman Hazel Blears was interviewed.

She told GMTV: "The police have been to see me once to discuss the inquiry in general terms.

"I obviously wasn't around at the time that these transactions took place."

ROOKIE SNP MP Angus MacNeil, who sparked the cash-for-peerages police probe, yesterday won a major honour for initiating the inquiry.

Mr MacNeil, MP for the Western Isles was voted Inquisitor Of The Year at the annual Spectator Parliamentarian Awards.

Voice of the Mirror: Page 6

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CAPTION(S):

PEERAGE PROBE: John Yates, Lord Levy and Hazel Blears' CLEARED: Burrell