LONDON - The row over political funding deepened on Thursday after parliament's sleaze watchdog confirmed he was investigating a complaint made against Conservative Treasury Spokesman George Osborne.

The inquiry by Standards Commissioner John Lyon is in response to a complaint from two Labour backbench MPs over 487,000 pounds of donations.

Lyon is already investigating donations to Work and Pensions Secretary Peter Hain.

Osborne's money was paid to the Conservative Party to fund his work in the shadow cabinet and was declared to the Electoral Commission.

But the MPs, John Mann and Kevan Jones, say Osborne should also have declared the cash in the register of members' interests.

Osborne said a House of Commons official had advised that such donations - made to a political party but specified for an individual's use - did not need to be registered.

Conservative Leader David Cameron has backed Osborne, saying the advice received had been unclear.

The Electoral Commission has asked the Conservative Party for clarification over the money.

The probe into Osborne's finances follows inquiries into the failure by cabinet minister Hain to declare 103,000 pounds of campaign donations.

The Standards Commissioner is investigating Hain's conduct, while the Electoral Commission is considering what action to take over the matter.

The Commission only has powers to fine political parties, not individuals, and may opt to pass the Hain inquiry to police.

It is preparing to publish details of Hain's donations, which come on top of 82,000 pounds of money he had already declared in connection with his unsuccessful campaign for deputy Labour leader last year.

Hain has apologised for the late declaration, blaming poor administration among his campaign team.

The affair has embarrassed the Labour government, but Prime Minster Gordon Brown has supported his cabinet colleague, saying Hain was guilty of no more than "an incompetence".