Wendy Alexander today declared her determination to stay in her post despite the illegal donation to her leadership campaign.

Speaking before a meeting of Labour MSPs, Ms Alexander insisted she did not set out "intentionally" to break the rules.

Ms Alexander has been under pressure since investigations by The Herald and Sunday Herald revealed the tax exile who gave money to her campaign team.

Ms Alexander said:"Mistakes have been made. I have always believed politicians should have the highest standards of integrity.

"It would be easy to quit but also wrong.

"To give up this job in these circumstances would be also giving up my reputation for integrity and honesty and I'm not prepared to do that.

"For the record, there is repeated correspondence initiated by me personally, dealing with the issue of permissibility, and demonstrating my interest in ensuring that donations received were indeed permissible."

Ms Alexander's statement came after the tax exile at the centre of the Labour donations row hit out at "gross mismanagement" by the Holyrood Labour leader's campaign team.

Paul Green insisted he had regarded his donation of £950 - now accepted by Labour as illegal - as "above board" after assurances from Labour MSP Charlie Gordon.

He also confirmed his donation was written on a personal cheque from his Jersey address.

In an interview on BBC Radio Scotland's Good Morning Scotland programme, Mr Green said: "How the Labour party managed to get themselves in this mess is something I find difficult to understand.

"I think what you have to say is that this has to be gross mismanagement.

"Just looking at it from afar, who in their right mind is going to try and hide £950?

"I could possible understand if it was £9500, or £95,000, or £950,000.

"But you just can't believe £950.

"I find this very sad because I have known Charlie Gordon for a number of years and I have found him to be a very honourable and decent man.

"Charlie must have been misled or didn't do his homework.

"From my perspective, although it's rather unfortunate I really can't see there was any criminal intent at all."

On Saturday, Mr Green told this newspaper that he had done nothing wrong and alleged that he had been "smeared" by Ms Alexander's team.

He said: "I have been completely exonerated, which is good news for me and not so good news for those who tried to smear me. If I live to be 1000, I will never know how the Labour Party got themselves into this mess."

Mr Green's new comments came as pressure continued to grow on Ms Alexander.

Ms Alexander's allies insisted she had no intention of resigning after the revelation she accepted money from Mr Green.

However, a former standards watchdog has called on her to stand down pending an Electoral Commission investigation.

Last night the Labour donations scandal south of the Border took a new twist as cabinet minister Peter Hain apologised after revealing further donations to his deputy leadership campaign were not properly registered.

The Work and Pensions Secretary said he had told the Electoral Commission and was reviewing donations to his campaign.

Mr Hain last week admitted he had failed to register a £5000 donation from Labour's chief fundraiser, Jon Mendelsohn.

Earlier in the day Prime Minister Gordon Brown, whose own future has been called into question over illegal donations to Labour, said he was "angered" by what was happening to the party.

"We've got to sort it out and sort it out very quickly," he said.

The Electoral Commission has been asked to investigate a second donation, to the election campaign of Mr Gordon, the Glasgow Cathcart MSP, in April.

In another development last night two Labour peers called on Strathclyde Police to investigate the leaking of a document detailing donors to Wendy Alexander's leadership campaign to our sister newspaper, the Sunday Herald.

Labour MSPs will today hold their first group meeting since The Herald revealed the identity of Ms Alexander's illegal donor, Jersey-based Paul Green.

Duncan McNeil, Labour group chairman, said: "I have spoken to many colleagues over the last 24 hours, who have all expressed their support for Wendy."

However, the former chairman of the Committee on Standards in Public Life, Sir Alistair Graham, said Ms Alexander should consider her position.

He said: "When people face the danger of a criminal prosecution under the 2000 (Elections) Act then normally you step aside from your position so you can concentrate on clearing your name, if that's what her intention is."

Lord Maxton, the former Glasgow Cathcart MP, and Baroness Adams, who was Labour MP for Paisley North, have written to the police urging them to investigate whether the Sunday Herald broke the law by revealing they had given money to Ms Alexander's campaign. They claim that, as the donations were less than £1000, their anonymity should have been protected.

Last night Sunday Herald editor Richard Walker said: "Of all the issues facing the Labour Party just now, the one that should be the least concerning them is how matters of legitimate public concern get into the public domain."

Meanwhile, the Electoral Commission has given Ms Alexander until tomorrow to provide it with information about her donations.

The election watchdog has already called in Scotland Yard to investigate the allegations of wrongdoing in relation to the £650,000 businessman David Abrahams gave to Labour using proxies.