The row over party political funding was reignited last night after it emerged the Conservative Party's election nerve-centre in Warwickshire is funded by leading West Midlands businessmen.

The Conservative Party was accused by Labour of breaking funding rules while the Electoral Commission said it was looking at the links between the Tories and the Midlands Industrial Council (MIC).

Labour has attacked the Tories for accepting donations from the MIC, a group of leading business figures from the West Midlands, because it does not reveal the names of its members.

It argues the donations breach the spirit of party funding rules, which say every party must reveal the source of all donations of £5,000 or more.

Cabinet Minister John Hutton, the Work and Pensions Secretary, demanded an inquiry into the Conservatives' high-technology regional headquarters in Coleshill, near Coventry.

Last night the Electoral Commission, the official spending watchdog for political parties, refused to launch a formal investigation but said it was examining the relationship between the Tories and the MIC.

The latest attack comes as Labour's own dealings with big business are once again in the spotlight, after Downing Street's director of government relations, Ruth Turner, was interviewed under caution last week.

Lord Levy, Labour's chief fund-raiser, was arrested and bailed in the "cash for honours" scandal and it is reported that the Prime Minister will be interviewed by police within weeks.

The Coleshill campaign headquarters covers the whole country and is equipped with the same computer system used by George Bush's team in the 2004 presidential elections. It is designed to allow the party to target potential floating voters in the constituencies most likely to affect the outcome of a General Election down to the exact street.

In an interview with The Birmingham Post last year, former Tory leader Michael Howard said Warwickshire was chosen partly because of its convenient central location, but also because of the electoral importance of the West Midlands region.

"There are lots of target seats close by," he said.

It has emerged that the headquarters is run by an organisation called Constituency Campaigning Services, which is funded to the tune of £1 million a year by the MIC.

The organisation's home, Coleshill Manor, is reportedly owned by multi-millionaire car importer Robert Edmiston, a Black Country businessman and key MIC donor.

Mr Cameron yesterday described Coleshill Manor as "effectively a part of the Conservative Party".

However, the party had previously claimed it was a "regulated donee" - a technical term for an organisation which supports a political party but is not part of it.

Mr Hutton said: "These stunning admissions by David Cameron raise serious questions about the Tories' secret funding arrangements.

"Contradicting his party's own statement, he confirmed that their campaign centre at Coleshill Manor is part of the Conservative Party.

"The centre is funded as a regulated donee, yet under the law regulated donees cannot be part of a political party.

"Cameron's admission appears to suggest that the Tories are breaking the rules and require urgent investigation by the Electoral Commission."

A spokeswoman for the Electoral Commission said it was looking into the status of MIC. Mr Cameron also confirmed he had met members of the MIC.

However, Mr Hutton claimed Mr Cameron should reveal the group's member-ship list. As well as Mr Edmiston, known members of the MIC include Sir Anthony Bamford, the head of JCB; the truck firm founder Chris Kelly and John Butcher, a former Coventry MP and ex-Trade and Industry Minister.

The Conservative Party declined to comment last night.