George Osborne has admitted he had made a "mistake" by becoming involved in talks about a donation from Russian billionaire Oleg Deripaska.

In an attempt to draw a line under the Corfu yacht affair, the shadow chancellor yesterday broke his week-long media silence and said that it "did not look very good" that he was present when the possibility of a £50,000 donation was discussed with the financier Nathaniel Rothschild.

"I neither asked for money nor received any and I didn't break any rules but I think I did make a mistake," said Mr Osborne, vowing that he would no longer take part in any discussions about individual donations to the party.

"I think in politics it is not just what you say or what you do, it's how things look. If I am absolutely honest, this didn't look very good and I regret that," he went on.

"I think the real judgment is can you learn from mistakes you make. I have changed the way that I am going to operate when it comes to fundraising and I will not discuss individual donations with individual donors."

The Conservatives hope the contrite apology will draw a line under the controversy that has dragged Mr Osborne and new Business Secretary Lord Mandelson into deep water over meetings they had with Mr Deripaska on his yacht this summer.

On his return from holiday, Mr Osborne made the real mistake of anonymously briefing London journalists about a private conversation he had with Lord Mandelson concerning the Prime Minister.

He broke a cardinal rule of privileged hospitality and, more fatally, he crossed the "Prince of Darkness".

Lord Mandelson hit back and Mr Rothschild, an old friend from Oxford, accused Mr Osborne of trying to "solicit" a loan from Mr Deripaska while he was staying at the financier's villa on the Greek island of Corfu.