The government today denied that the award of a £32m contract to produce smallpox vaccine was linked to donations to Labour Party funds by the owner of the Oxford company involved.

The Department of Health yesterday announced that it was buying stocks of smallpox vaccine sufficient to protect 16 million people in the event of a germ warfare attack.

But it was revealed last night that the owner of supplier PowderJect Pharmaceuticals, Paul Drayson, had given £50,000 to Labour.

Health minister John Hutton denied that the award of the contract was linked to the donation.

He said: "The contract was awarded to PowderJect for one reason alone: it was the only company that was able to supply the vaccine that we required as soon as possible. "That was the only consideration in our minds.

"At every stage, ministers took the advice of the permanent secretary at the Department of Health, who confirmed that the contract should be placed with PowderJect."

The deal is part of a package of security measures introduced after September 11. At an estimated cost of £1.90-£2 per shot, the stock would be enough to treat 16 million people, or more if the doses are divided up.

However, a Department of Health spokesman stressed that there was no new evidence of any credible or imminent threat to the UK. A spokesman for PowderJect refused to comment.

However, the company announced yesterday on the Stock Market that it had been awarded a £32m "supply contract" over the next 12 months, and said it was entering a "strategic collaboration" with Danish company Bavarian Nordic for the manufacture and supply of a vaccine and transfer of the production to PowderJect.