http://news.bbc.co.uk/1/hi/uk_politics/6279729.stmAdviser Ruth Turner has become the fourth person to be arrested by police investigating the cash-for-honours allegations.
Ms Turner was arrested at 0630 GMT but later released on police bail after being quizzed for several hours.
She was questioned over honours allegations and suspicion of perverting the course of justice. She has issued a statement denying any wrongdoing.
Tony Blair gave Ms Turner, one of his closest aides, his full backing.
"Ruth is a person of the highest integrity for whom I have great regard and I continue to have complete confidence in her," said the prime minister.
In a statement released by 10 Downing Street, Ms Turner said: "I absolutely refute any allegations of wrongdoing of any nature whatsoever."
