David Cameron is refusing to publish a full list of people he has entertained in his Downing Street flat, arguing that the details are private.
Yesterday the Conservative Party co-treasurer Peter Cruddas resigned after being filmed by The Sunday Times apparently offering access to the prime minister, and crucially influence over policy, in return for donations of £250,000 a year.
On Monday a Downing Street source has admitted a "handful" of donors had been for dinner with the prime minister and his wife, Samantha, in their flat above Number 11.
Those invited were old friends of the prime minister who just happened to have donated money to the party including Michael Spencer, a former Tory treasurer, but not Cruddas himself, the source told the Press Association.
But Ed Miliband is demanding full disclosure of which Tory donors had visited Downing Street or Chequers, Cameron's country residence, since May 2010 and what policy representations they had made.
Cruddas urged reporters from The Sunday Times, posing as wealth fund executives, to give more than £250,000 in return for direct face time with senior ministers.
He claimed those making such donors, classed as "premier league" could raise issues with ministers and feed their concerns into a Downing Street "policy committee".
Cruddas resigned within hours of his claims being exposed by newspaper and denied that party donors could in fact improperly influence ministers.
The matter has been reported to the police.
Cameron insisted that was "not the way" the Conservative Party raised money and promised an internal inquiry to ensure it would not happen again.
The prime minister said: "What happened is completely unacceptable. This is not the way that we raise money in the Conservative Party, it shouldn't have happened.
"It's quite right that Peter Cruddas has resigned. I will make sure there is a proper party inquiry to make sure this can't happen again."
PETER CRUDDAS RESIGNATION - FULL COVERAGE
But Miliband insisted the allegations could not be "swept under the carpet" and said an independent investigation must establish "what influence was sought, what influence was gained, and what impact it had".
"The prime minister came into office promising that he would be transparent, and he would ensure that the right systems would be put in place around Conservative party funding," he said.
"Now we discover very disturbing revelations about the way that access was sought, the way that access was bought or apparently at least offered, and that's why we need a proper investigation into what happened.
"It can't be an internal Conservative investigation sweeping it under the carpet and in a way keeping it from the public. We need to know what happened.
"These allegations are so serious because it's about the way that policy is made, we've just had a Budget in which the tax rate has been cut at the top of the income scale.
"We need to know what access was paid for, if access was paid for, and what contributions were made and the interaction between the Prime Minister, the Chancellor and Conservative party donors."
The row led to renewed calls for reform of party funding. Sleaze watchdog Sir Christopher Kelly warned that the incident could not be seen as "an isolated event" and urged the parties to come through on their commitments to the "big donor culture".
Sir Christopher, chairman of the independent Committee on Standards in Public Life, said politicians should not be allowed to "duck" the issue of party funding any longer.
"It would be wrong to regard this as an isolated event. Events like it are inevitable as long as the main political parties are dependent for their existence on large donations from rich individuals or, in the case of the Labour Party, a small number of trade unions.
"The parties collectively need urgently to address the damage this does to confidence in the integrity of the political process."
Asked about funding reform, Cameron was non-committal, stressing that he had already addressed issues within the Conservative party.
"We've reformed party funding. I took over a party with £20m of debt. It's now virtually debt-free," he said.
"We've massively broadened our supporter base. We have very strict rules, very strict compliance, and I'm going to make sure that the rules are properly complied with in every case."
But Danny Alexander, the chief secretary to the Treasury and second most powerful Lib Dem in the Government, said the three main parties would be making a renewed effort on funding reform within the next few weeks.
"What I would say is this makes the case for reforming the system of party funding in this country even stronger.
"No political party has been without its problems in relation to party funding. Over the next few weeks the three parties will be getting round the table following on from an initiative by Nick Clegg, the deputy prime minister, to discuss how we can change the way party funding works to try and get the big money out of politics."
In a statement released in the early hours of this morning, Mr Cruddas said he regretted "any impression of impropriety arising from my bluster".
"Clearly there is no question of donors being able to influence policy or gain undue access to politicians," he said.
"Specifically, it was categorically not the case that I could offer, or that David Cameron would consider, any access as a result of a donation."
It has emerged that the matter has been reported to police.
A Metropolitan Police spokesman said yesterday: "Today, Sunday, March 25, an allegation was made at Greenwich police station under the Political Parties, Elections and Referendums Act 2000.
"The allegation is currently being assessed. We are not prepared to discuss this any further."
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