UKIP leader Nigel Farage has claimed he is the victim of a "politically motivated" campaign against him and his party after a row over his European Union allowances.

Mr Farage said allegations yesterday that he had a rent-free arrangement for an office, which should have been declared as a donation by the party, had been spun up because of UKIP's current high profile.

It was alleged Mr Farage has received £15,500 a year from the EU since at least 2009 for the upkeep of his Sussex constituency office.

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The Electoral Commission is to attempt to find out if the rent-free arrangement should have been declared.

But in a newspaper article, Mr Farage blamed The Times newspaper, which revealed the story, for a 'smear campaign' because it is establishment and a supporter of David Cameron. He said: "A month or so ago it tried, via a politically motivated opponent of mine, to start a different investigation into my use of EU money.

"The bureaucracy has belatedly announced - on Monday night - that there was no case to answer, not even enough evidence to request an investigation. The very next day The Times opens-up another equally vacuous front.

"As a party we have been expecting this; Ukip is doing well in the polls and posing a threat to the status quo. This week's Times article is based on erroneous second-hand testimony and crass misinterpretation."

Mr Farage also denied transferring any of the money into offshore bank accounts in tax havens.

He said: "As if besotted, The Times have published the accusation that I have siphoned money to the Cayman Islands. This is utterly outrageous."