DAVID CAMERON has been accused of nepotism after a former Tory donor was handed a key education post in the Coalition Government and nominated for a peerage.

Venture capitalist John Nash, who has donated £182,000 to the Tories since 2006, was confirmed as schools minister and will be ennobled. His firm, Sovereign Capital, has also made millions in contracts from the Department for Work and Pensions.

It came after tycoon Dolar Popat, a former Ugandan refugee who gave £200,000 to the Tories, was appointed a Government whip in the Lords.

Labour's vice-chairman Michael Dugher said: "Two major Tory donors have been given ministerial jobs in two days."

But Number 10 defended the move, saying he was qualified for the job he holds and assuring that the new schools minister would not take decisions where there was a conflict of interest.A Downing Street spokesman said: "What qualifies him for the job is his extensive knowledge of the education sector."

He said he would not make decisions which could affect the charity he founded, Future.

The row follows the resignations of Lord Strathclyde and Lord Marland from the Coalition's front benches in the Lords.