Police have asked a Midland MP to suspend an inquiry into claims Downing Street sold honours in case it prejudices a possible future prosecution.
Tony Wright (Lab Cannock Chase) agreed to suspend his inquiry into the "loans for honours" scandal.
Dr Wright is chairman of the high-powered House of Commons Public Administration Committee.
It is looking allegations four businessmen lent Labour £4.5 million and were then nominated for peerages.
But Scotland Yard Deputy Assistant Commissioner John Yates warned that prosecution was "the only credible deterrent for any briber".
He added: "It may be too early for us to widen our investigation into the arena of corruption, but I certainly have not ruled this out."
In a letter to Dr Wright, he says: "My concerns were that your scrutiny could be viewed as an abuse of process in terms of fairness in any future potential criminal trial."
It has emerged that Labour received £14 million in loans last year. Unlike donations, which have to be publicly declared, these can be given anonymously. Labour Party treasurer Jack Dromey, other elected party officials and deputy leader John Prescott have complained they knew nothing about the loans.
In an indication of the concern the affair is causing in the Labour Party, Birmingham MP Richard Burden (Lab Northfield) raised the issue in the Commons and demanded changes.
In a question to Constitutional Affairs Minister Bridget Prentice, he asked: "Does she agree that the first thing to address is the need for transparency in party funding, something that should apply equally to all parties?"
The solution could be to end the system which allows the Prime Minister to nominate peers and hold elections for the House of Lords instead, he said. "Does she agree that election, not appointment, should be the cornerstone of any House of Parliament that plays a role in framing the laws of this country?"
Ms Prentice replied: "He is right about transparency in party funding.
"We have set up the Phillips review to look at that. We are also in positive talks across parties about that transparency.
"On reform of the House of Lords, he knows that there will be a free vote in this House on the subject."
John Prescott, the Deputy Prime Minister, yesterday admitted the affair had caused anger on the Labour benches.
Speaking in the Commons, Mr Prescott said: "I'm sure the recent stories about the loans to political parties caused concern on both sides of the House.
"I don't think there is any doubt about that."
He called for State funding of political parties to ensure they did not need to rely on donors.
"I think we will have to increasingly move towards a form of State financing," he said.
Mr Prescott was standing in for the Prime Minister, who was in New Zealand.
Scotland Yard denied reports that the police inquiry could be broadened to include the Conservative Party.
Black Country business-man Robert Edmiston, who runs car importers IM Group in West Bromwich, reportedly lent the Conservatives £2 million before the election, which he is now converting into a donation.
A second Commons committee, the Constitutional Affairs Committee, announced it would begin its own inquiry into the wider issue of party funding next month.