Oxford West and Abingdon MP Dr Evan Harris has called for big money donations to be outlawed from British politics after the latest controversy landed George Osborne in hot water.

Mr Osborne, MP for Tatton, today admitted he made a mistake over his decision to discuss Conservative Party fundraising with Russian oligarch Oleg Deripaska.

The Shadow Chancellor has now stepped aside from Tory fundraising after it was alleged he had been involved in discussions over a £50,000 donation in his dealings with Mr Deripaska.

Liberal Democrat MP Dr Harris warned that large private donations needed to be stopped to clean up British politics and regain public trust.

Dr Harris said: "These unsavoury incidents will continue to happen until we get big money out of British politics.

"Wealthy individuals should not be able to dictate the outcome of elections, even if the donations are legitimate.”

The latest row erupted when Nat Rothschild, a friend of Mr Osborne's from their Oxford University days, accused him of trying to “solicit” a loan while staying in a villa on Corfu.

Mr Osborne has admitted meeting Mr Deripaska on his yacht, but has denied asking him for any money.

He has however admitted that he was present when Mr Rothschild discussed the possibility of the Russian making a donation with Tory Party chief executive and fundraiser Andrew Feldman.

Their conversation included a discussion about whether Mr Deripaska — who, as a foreigner, is banned from making individual donations — could make a contribution through his British-based company, Leyland DAF.

Fellow Tories Didcot MP Ed Vaizey and Henley MP John Howell both refused to answer questions on the conduct of their colleague.

Banbury MP Tony Baldry said: "We all make mistakes in life and George has had the common sense to make clear what he feels.”

Tory leader and Witney MP David Cameron's office did not respond to requests for a comment.