A City watchdog, established by former PM Gordon Brown to focus on global financial regulation, is itself being probed by police after discrepancies were found in its accounts.

The International Centre for Financial Regulation (ICFR), said it had alerted City of London police after "internal investigations revealed that a sum of money appears to be missing" from the organisation's bank accounts.

Barbara Ridpath, chief executive of the ICFR said: 'We consider this situation to be a serious one and it will have a bearing on the future of the ICFR. We are working urgently to find out exactly what has happened, and to resolve the situation in the best interests of all concerned.'

When the body was set up in 2008, the Big Four accountancy firms contributed £100,000 to help with its launch.

The government also provided a three year funding pipeline of £2.5m with a host of banks such as HSBC and Barclays and other financial institutions like venture capitalist 3i, making their own contributions.

Chaired by economics academic Lord Currie of Marylebone, the organisation says its role is "to encourage dialogue that identifies best practice across the traditional financial centres in the US, Europe and Asia and embraces emerging and developing economies worldwide".

The body said a "member of the management" has been suspended pending the outcome of the inquiry.