John Major was attacked by Labour and the Liberal Democrat leaders last night after vetoing

John Major was attacked by Labour and the Liberal Democrat leaders last night after vetoing an inquiry by the Nolan committee into party funding. Sources close to the Nolan committee, which is meeting today, said an inquiry into members' interests in the Lords was now a "front runner" for its next investigation, and a review of standards in local government would also be on the agenda. The inquiry became embroiled in party-political controversy after Downing Street made it clear the Prime Minister would not agree to its terms of reference being widened to carry out an investigation into how the parties are funded. That would have covered the secret donors of substantial sums to the Conservative Party as well as the trade union backing for Labour.Frank Dobson, a Shadow Cabinet member, said: "The Tories are covering up the biggest can of worms of the lot."Paddy Ashdown, the Liberal Democrat leader, said: "It is typical of Major. He sets a bloodhound on a trail and then calls it off when it threatens to uncover something nasty. It is short-term politics to solve a short- term problem."As the gloves came off, the Tory party chairman, Jeremy Hanley, accused Labour of "hypocrisy" over party funding following the report in the Independent about funding organisations for the Labour Party election campaign.The row overshadowed the Nolan report last week which amounted to the most far-reaching recommendations in curbing MPs' interests ever delivered.

The Nolan committee had hoped to win all-party backing, but the controversy over its next moves is certain to be raised in the Commons on Thursday when MPs debate the report. The Tories would welcome a Nolan inquiry into local government to reiterate the allegations of corruption in Labour authorities made by Mr Hanley at the start of the Tory local election campaign. But Labour said it would welcome an inquiry into local government.The Prime Minister's office reinforced his objections to an investigation into party funds as being outside Lord Nolan's remit. "There is plenty of work to be done on their existing remit," a senior source said.Lord McAlpine, page 19. The French Foreign Minister, Alain Jupp, who is expected to be the country's next prime minister, yesterday served notice that France would not keep its 4,800 troops in Bosnia without political progress towards a settlement. He was speaking after a meeting in Paris with Douglas Hurd, the Foreign Secretary. The two, believed to see eye-to-eye over the former Yugoslavia, spent part of the time in talks without their officials.

Mr Hurd dropped plans to attend a ministerial meeting in Portugal to speak to Mr Jupp as soon as possible after the conservative victory in the French presidential election. It is clear the new government under President Jacques Chirac intends to use its troops as a bargaining lever to try to resolve the chaotic international handling of the peace-keeping effort. Britain is expected to back the initiative.Mr Jupp and Mr Chirac seem determined to push for a settlement or to pull out their soldiers. The Foreign Minister has criticised the United States and Russia for what he considers their irresponsible backing of the Muslims or the Serbs.Mr Jupp fears the United Nations force (Unprofor) could simply freeze front lines, prolong the war and provide excuses to delay talks. "France cannot accept that the presence of Unprofor be considered increasingly as an obstacle to a peace settlement," he said yesterday. In the Commons last week Mr Hurd warned for the first time of "the danger of a wider Balkan war in which the US and Russia would back different sides".The perception in London and Paris of that risk has united them on the need to stay in former Yugoslavia.

But France has been outraged by the casualty rate among its peace-keepers, while Britain has said it would withdraw its forces if, under Mr Hurd's formula, "the risks to our troops might outweigh the good which they could do".Both countries want to press for one last effort to get President Slobodan Milosevic of Serbia to recognise Bosnia and Croatia in return for easing UN sanctions. Mr Hurd and Mr Jupp yesterday discussed a draft proposal agreed by the five-nation Contact Group in Frankfurt last Friday. Mr Jupp referred to this yesterday when speaking of "a glimmer of hope". But any initiative must win the backing of the Group's other members - the US, Russia and Germany - and they pursue different Balkan interests.Mr Hurd goes to Washington tomorrow to argue the Anglo-French case with the Secretary of State, Warren Christopher, and the National Security Adviser, Anthony Lake.French pressure is also behind a UN move to order a fundamental review of the peace-keeping operation.