The Metropolitan police said that the 216-page dossier was passed to the Crown Prosecution Service, together with supporting material, yesterday afternoon.

"It is now a matter for the CPS to consider the evidence [and] advise us on whether any further inquiries are necessary and whether any charges should be brought," said a spokesman.

Lord Levy, Ms Turner and Sir Christopher were arrested in connection with alleged offences under the Honours (Prevention of Abuses) Act 1925. Each denies any wrongdoing. Lord Levy and Ms Turner have also been questioned in relation to a parallel inquiry concerning a possible conspiracy to pervert the course of justice.

Mr Blair has been interviewed twice by police, not under caution - the first time a serving prime minister has been part of a police investigation. Yesterday a Downing Street spokesman declined to comment on the matter, saying it was a matter for the police. However, there is little doubt that the timing is unfortunate for the government, putting the issue back in the spotlight before the May 3 elections.

Angus MacNeil, the Scottish Nationalist party MP who made the original complaint in March last year, said yesterday: "This is an enormously significant development. It confirms the scale of the case to answer in the cash-for-honours scandal, and we now await the CPS recommendations."

He added: "I would think it unlikely we would see any charges before the election, but charges before [Mr Blair] steps down would certainly be possible. It casts a massive cloud over Tony Blair's premiership."

The investigation began after it emerged secret loans had been made to Labour before the 2005 election, and that some lenders had subsequently been nominated for peerages. The probe was subsequently widened to include the other main political parties. Yesterday the CPS confirmed it had the file, and would consider whether to bring any charges. "It will now be reviewed in accordance with the code for crown prosecutors to determine whether any individuals should be charged with any offences," the statement said. "These decisions will be notified to the Metropolitan police in due course, and will be publicly announced after concerned parties are notified."

The decision on whether to bring any charges will be made by Carmen Dowd, head of the special crime division at the CPS, which deals with the most sensitive and specialised cases, including deaths in custody, medical negligence, and corporate manslaughter. The director of public prosecutions, Sir Ken Macdonald, has said he would stand back from any decision, as he was for three years a member of Matrix Chambers, where Mr Blair's wife, Cherie Booth, practises.

The attorney general, Lord Goldsmith, may also be consulted about any possible prosecution, though he has said that he would appoint an independent senior counsel to review material and advise on prosecutions, in order to avoid any appearance of conflict of interest.

Yesterday Mr MacNeil said: "The attorney general, Lord Goldsmith, was appointed to his post by the prime minister, who himself is at the epicentre of the allegations. It is simply untenable for him to have any role in this case, and he must step back from that now."

In July 2006 Lord Levy turned up by appointment at Colindale police station in north London and was arrested under two anti-corruption laws. Police seized documents and computer files from his business address, including documents, letters and emails relating to Labour lenders. He was again questioned in September.

Ruth Turner, Downing Street's director of external relations, was arrested at dawn on January 19 on suspicion of perverting the course of justice. A month and a day after that arrest she was bailed again, pending further inquiries. It emerged last month she had expressed concern in a legal document that Lord Levy was asking her to shape her recollection of events leading up to the nomination of honours to some Labour donors. The document was passed by her lawyers to the police.