Britain's most senior police officer was facing questions over his judgment today after it emerged he shared a table with Lord Levy at an official dinner.
The Metropolitan police commissioner, Sir Ian Blair, was seated on the "top table" with Labour's chief fundraiser at the Jewish Security Trust's annual dinner.
Lord Levy has been arrested twice in connection with Scotland Yard's high-profile cash-for-honours inquiry - the second time on suspicion of conspiracy to pervert the course of justice.
He has been at the centre of a series of allegations about the affair this week, but has vehemently denied any wrongdoing.
A source said Sir Ian and Lord Levy had a "brief" conversation at the dinner, although Scotland Yard said today that they had not discussed the cash-for-honours investigation.
It is understood that Sir Ian subsequently informed the Metropolitan Police Authority (MPA) of the encounter, which took place less than two weeks ago.
His officers are preparing to submit a file to the Crown Prosecution Service for a decision on whether to bring criminal charges over the cash-for-honours inquiry, which has dominated the headlines in recent weeks.
Sir Ian has been dogged by a series of controversies since he took over the leadership of Britain's largest police force two years ago.
MPA member Damian Hockney said the latest row raised further questions over the commissioner's judgment.
"I trust the commissioner's word that he did not discuss the investigation with Lord Levy at the dinner," he said.
"However, the two should not have been on the same table together or been in a position where they would inevitably exchange words, however brief.
"This is the most sensitive police investigation for many years and it's vital that it is seen to be completely independent of any possible interference.
"The police have managed to avoid being affected by the dramatic loss of trust in many other branches of government. This is the type of situation which could erode confidence, even if unintentional."
A Scotland Yard spokesman said: "Commissioner Sir Ian Blair was one of more than 1,200 guests at the Community Security Trust annual dinner on February 26.
"He was aware that Lord Levy would be present and acted in accordance with police instructions about meeting people on police bail, informing an appropriate senior officer both before and after the event.
"The commissioner was one of 18 guests on the 'top table' along with Lord Levy although at the MPS's request they were not seated close to each other.
"The commissioner did not discuss details of the investigation into alleged abuse of honours with Lord Levy."