Labour raised nearly £750,000 more than the Conservatives between July and September, figures released by the electoral commission on Wednesday showed.
The party raised more than £3.5m in donations during the third quarter of 2011 – compared to £2.7m by the Tories. Some 89%, or just over £3.1m, of the party’s cash came from unions.
In contrast the Conservatives raised over 10 times the amount of money Labour did through individual donations.
The Tory’s largest donation came from the city of London’s richest man Peter Cruddas, who gave the party £258,500.
The Liberal Democrats raised less money than the SNP, who raked in almost £2m in the period - and the taxpayer contributed £2.1m to political parties.
The electoral commission's figures come in the wake of a report by Sir Christopher Kelly, chair of the Committee on Standards on Public Life, who recommended limits on the amounts millionaires and trade unions can pledge to parties, replacing the current system with taxpayer funding based on the number of votes the parties get.
However his report looks likely to be rejected because he is calling for a cap on donations to parties of £10,000. His report concludes this is "the only safe way to remove big money from party funding."
Such changes would make it difficult for wealthy financiers to continue to fund the Tories in the way they currently do.