The Conservatives have launched an internal investigation after allegedly failing to properly declare donations in the name of a company which were in fact from Zac Goldsmith, the billionaire candidate.

The elections watchdog has launched an inquiry into donations to the Tory Party made by the company of wealthy party backer Lord Ashcroft, it was disclosed last night. The Electoral Commission confirmed that it was mounting a formal investigation into the donations made by Bearwood Corporate Services.

The Conservatives could be forced to pay back nearly £5 million of donations if the party is found to have breached electoral law by accepting money from a company owned by Lord Ashcroft the party's deputy chairman.

The Conservatives received the most donations - more than £4m - in the first three months of 2009, figures show.

The Conservatives receive £3.69m in donations between July and September, according to official figures released by the Electoral Commission.

Donations given to the Conservatives in three months to the end of June exceeded those received by Labour by almost £1m, official figures show.

Donations to the Labour Party outstripped those to the Tories by more than £1m in the last financial quarter. The party received more than £5m in private donations between July and September this year, according to the Electoral Commission, while the Conservatives were gifted just in excess of £4m in private donations in the same period.

The Election Commission confirms that it will investigate more than £3m in donations from a company associated with Lord Ashcroft, the Conservative party's deputy chairman

The Conservatives continue to outperform the Labour Party in raising donations with no more than 13 months to go before the next General Election, official figures showed yesterday.

The Conservatives received twice as much money in donations as Labour did in the last three months of 2008.