Peter Hain is preparing to admit to the Electoral Commission that he has failed to declare more than £100,000 in donations to his campaign for Labour's deputy leadership.
It is understood that there are almost 20 donations that his team failed to declare, in breach of the rules for party political elections.
The scale of the under-reporting - more than half the total income received by the Hain campaign - will shock many party members and raise questions as to how such a massive apparent oversight occurred.
He has reported to the commission only £82,000 in donations, suggesting he spent nearly £200,000 in total on his campaign, considerably more than his five opponents for the deputy leadership.
The work and pensions secretary will face testing questions over whether the non-disclosure is simply a reflection of the chaos inside his camp or an attempt to conceal the sums raised and where they came from.
His critics will suggest that he was reluctant to give details of some of the donations because he did not want to reveal that his left-leaning campaign was dependent on business support. He will also be asked whether some of the donors thought their identities would be kept private.
Hain will reveal the names of all the undisclosed donors to the commission, but the GMB union believes that it donated between £15,000 and £20,000 of the unrecorded cash.
Nearly half the donations appear to relate to the period after the closure of the campaign and half to the period after Steve Morgan, a lobbyist, was brought in by Hain to run the operation in a switch of tactics in the summer.
Hain and his supporters accept he is legally responsible for reporting donations to his campaign, but other people on his team were charged with sending details of cheques to the commission.
There is no evidence that Hain sought to break the law and he has already admitted "deeply regrettable" administrative failings.
Morgan said yesterday he was brought in to the campaign to "bring order to the chaos". He denied that he had failed to report the donations, adding: "All I can say is that during my time running the campaign I faithfully reported every single cheque of £1,000 or above to the Electoral Commission."
However, the man he replaced, Hain's former special adviser Phil Taylor, dismissed the allegation of chaos and defended the minister.
He said: "There was no chaos and no financial irregularities on my watch. I had received and immediately declared £37,000 of legal donations to Peter Hain's campaign by the time I left the campaign on April 7. It's very sad that Peter's campaign manager Steve Morgan is now giving interviews trying to wriggle out of responsibility for whatever mistakes were made after I left.
"It is inconceivable to me that Peter Hain would have stood for such carelessness or omissions had he known about it. The Peter Hain that I know would never in a million years have accepted a donation and not declared it."
Taylor said he quit the campaign partly because he could not work with Morgan.
Asked whether he thought Hain was in serious political trouble, Taylor said: "We'll just have to wait and see what the fallout is when it becomes public about the donations that weren't declared."
He said the cabinet minister could not be responsible for the entire administration of his campaign.
But he added that Hain "was absolutely insistent that he knew who was donating and had a say in ensuring they were absolutely legal donations. But, you know, you absolutely have to trust your campaign team and your campaign staff and obviously something has gone wrong here and I feel deeply and desperately sorry that has happened."
He pleaded for people to look at Hain's wider record in office.
Hain apparently put the funding of his campaign aside once the campaign ended with him in fifth place in the field of six for a post won by Harriet Harman. He started to look at his campaign funding again after he was reminded by Jon Mendelsohn, one of Labour's chief fundraisers, that he had given Hain £5,000.
Hain's fate may depend on the attitude not just of Gordon Brown but also of the Electoral Commission.
In the past, the commission has ticked off political parties that declared donations late, as Hain did yesterday, but it may well view this scale of under-reporting more seriously and could impose a fine.
Hain ran the most expensive campaign among the contenders for the deputy leadership, eclipsing his rivals in the last 48 hours by spending about £60,000 on advertising in the Daily Mirror and sending almost a million letters to Labour party and trade union members urging them to vote for him. He also commissioned a campaign website and set up teams of regional organisers.
Fighting funds
Peter Hain thought to have raised between:
£180,000-£200,000
Jon Cruddas raised:
£143,000
Hazel Blears raised:
£73,000
Harriet Harman raised:
£46,000, plus £50,000 of her own loans
Alan Johnson:
£54,000
Hilary Benn:
£4,000