Tony Blair yesterday suffered the humiliation of becoming the first serving British prime minister to be interviewed by police conducting a criminal investigation.

In an event that casts a shadow over the last months of his premiership, Mr Blair was questioned inside No 10 for almost two hours by two Metropolitan Police officers investigating the "cash-for-honours" affair.

Mr Blair was told by the officers that he was not being interviewed under caution: in other words, that he is not being treated as a suspect at this point. Mr Blair is understood to have admitted to police that he had approved peerages for Labour benefactors but said that as they were expressly political honours it was entirely proper and legal for him to do so. He has always denied that he or his officials broke the law governing party political funding.

Mr Blair was accused last night of doing everything possible to keep the meeting out of the media spotlight. The Conservatives accused Downing Street of fixing the timing of the interview so it would coincide with publication of the long-awaited report of the inquiry into the death of Diana, Princess of Wales.

Police sources told the Financial Times that the timing of the interview with Mr Blair had been determined by Downing Street in order to fit Mr Blair's timetable. The Conservatives said: "Mr Blair's spin doctors are back to their old tricks." On September 11 2001 a Labour aide was found to have urged the publication of politically negative information on the grounds that it was "a good day to bury bad news".

However, the prime minister's spokesman denied the meeting had been arranged on a day dominated by other matters, saying: "Categorically, there was no linkage to other events."

The decision by the police not to interview Mr Blair under caution was good news for the prime minister, suggesting he will not be charged with any offence.

John Yates, the assistant commissioner in charge of the investigation, did not attend the meeting with the prime minister. Mr Blair did not have a lawyer with him and was accompanied only by a civil service notetaker.

Mr Yates has said he will deliver the results of his investigation to the Crown Prosecution Service next month. A CPS decision to mount a prosecution against a Labour figure could force Mr Blair to quit immediately. However, the political impact would be limited, given that he is expected to stand down by next May at the latest.

The Met investigation is focusing on whether the Labour party offered peerages to four businessmen. These business figures offered about £5m in loans to Labour in the run-up to the 2005 general election.

Mr Blair's spokesmansaid: "The prime minister explained why he nominated each of the individuals andhe did so as party leader in respect of the peerages reserved for party supporters as other party leaders do.

"The honours were not, therefore, for public service but expressly party peerages given for party service. In these circumstances, the fact that they had supported the party financially could not conceivably be a barrier to their nomination."