UK's Blair vows fight on as political woes mount

LONDON, July 16 (Reuters) Britain's beleaguered Prime Minister Tony Blair today gave his strongest hint yet that he has no intention of stepping down before next year.

As his political woes mounted over a ''loans-for-lordships'' scandal and opinion polls showed his popularity plummeting, Blair said: ''I look forward to next year's G8.'' In an interview with BBC TV at the G8 summit in St Petersburg he stoutly defended his Labour Party's chief fundraiser Michael Levy, who was arrested and questioned in a probe into allegations state awards were given in return for cash.

Blair, who has led Labour to an unprecedented three election wins in a row, has said he will not stand a fourth time but has not set a date for handing over to finance minister Gordon Brown, his chosen successor.

Amid mounting speculation that detectives may want to interview him next, Blair said he believed nobody in the Labour Party had broken the rules on party funding.

Labour came under pressure after it said it had received 14 million pounds (26 million dollars) in loans from 12 businessmen, some of whom were nominated for seats in the House of Lords. A law introduced in 1925 makes it illegal to sell Lordships.

Labour denies all wrongdoing in the probe. Detectives have so far questioned almost 50 people.

Blair told BBC One's Politics Show: ''Nobody in the Labour Party, to my knowledge, has sold honours or sold peerages.'' Blair was quick to defend Levy, one of his closest allies and personal envoy to West Asia.

''He's done a superb job in West Asia and I think if you talk to people out there, you would realise the respect in which he's held,'' he said.

Cabinet colleagues fear the scandal was smearing Labour's image and former Labour deputy leader Roy Hattersley called on Blair to quit at the Labour Party's annual conference in September.

''The longer he stays on, the more damaging it is for him as well as the party,'' Hattersley told GMTV.

Interviewed by the BBC, Education Secretary Alan Johnson said of the escalating scandal: ''It is awful because it puts a smear over my party.

''We probably have the least corrupt political system in the world,'' said Johnson, who has put himself forward as a possible successor to Deputy Prime Minister John Prescott, stripped of some powers after admitting to an affair with his secretary.

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