Labour today claimed a major blow to William Hague after Brighton millionaire Ivan Massow defected to its ranks.

The 32-year-old businessman, said to be a party adviser and on the list of Conservative candidates for the next election, claimed the Tories "cannot be trusted to govern Britain."

He said he had lost trust in William Hague's leadership.

Last year Mr Massow, who was born and raised in Brighton and has a home in Heathfield, was mentioned as a possible Tory Party candidate for Mayor of London.

But he eventually threw his support behind Steven Norris, becoming his principal policy adviser.

In his resignation statement last night he said he felt there was a lack of tolerance and inclusivity in the Tory Party and as a gay man he could not continue to be a member.

He said: "Under William the sad truth is that the Tories have become less compassionate, more intolerant and frankly just plain nasty."

He accused Mr Hague of surrendering his principles to the "lowest common denominator," adding that Tory policies were simply designed to "chime with the most base values and claw away at national insecurities."

David Gold, prospective Conservative candidate for Brighton Pavilion, expressed his sadness at the defection and said Mr Massow had "got it all wrong."

Mr Gold, who is gay and manned a Tory Party stall at Pride in Brighton at the weekend, said: "It is a great sadness that Ivan feels he has to leave. There was a place for him in the Conservative Party and there will be in the future if he decides to return.

"I am openly gay and I have been made very welcome by the party. I do not think the party has become more Right- wing and has learned the lessons of being thrown out in 1997. I think Ivan should have stayed to work at developing a more conciliatory approach to the gay community.

"I worked with William Hague for two years and I think Ivan has got it all wrong.

They are anything but intolerant."

Mr Massow left Longhill School in Rottingdean with just one O-level in metalwork and made his fortune offering financial advice to gay people at the height of the Eighties HIV scare.

Labour today welcomed Mr Massow's defection.

Health Secretary Alan Milburn said even those close to Mr Hague "are rejecting his brand of Toryism."

New Conservative party vice chairman Steve Norris, who worked with Mr Massow in the London mayoral election campaign, said: "We welcome members to the party every day and we lose them every day."

Mr Norris said he shared Mr Massow's views on Section 28, and insisted the Tories were "committed to inclusivity."

But Mr Norris added: "Here is a chap who is a Master of Foxhounds - I wonder how that is going to play with some of his new friends in the Labour Party."

This afternoon Conservatives insisted Mr Massow was not on their candidates list. A senior spokesman added: "He is not an adviser to William Hague. He has met William several times but that does not make him an adviser."