As the Prime Minister announced a major overhaul of the NHS to mark its 60th birthday, a former party treasurer warned that its books were in the worst state yet.

It was also confirmed that the Government faces another crunch by-election in Glasgow East, in the wake of bruising defeats in Crewe and Henley.

The body blows came as allies sought to rally support after a dreadful weekend which saw Scottish Labour leader Wendy Alexander quit over sleaze allegations, and leading donors criticise the PM's performance.

Health Secretary Alan Johnson, MP for West Hull and Hessle, praised Mr Brown's "integrity, decency and intelligence".

Loans to Labour totalling £7.45m are due for repayment or review by today although party sources insist there is no immediate "pinch point".

The pressure has been heightened by comments from former donors such as businessman Sir Gerry Robinson, who condemned Mr Brown as an "incapable leader" and ruled out giving again.

Unions are reported to be seeking to capitalise on the lack of money by demanding measures such as extra time off work for parents and free school meals for all primary school pupils in return for continued funding.

Yesterday Baroness Prosser, who was party treasurer between 1996 and 2001, urged the Prime Minister to "get stuck in" and tackle the financial problems.

"I think we need the Prime Minister himself to take this on his shoulders and say: 'This is a worse situation than we have been in ever and therefore as Prime Minister and leader of the party I need to get stuck in here,'" she said.

Lady Prosser said of Mr Brown: "He is not exactly a sunbeam, but that is his style. He is very solid, very reliable, very committed to a good Labour agenda."

Lady Prosser admitted it was not healthy to be so reliant on trade unions, but dismissed the notion that their contributions bought them influence.

Meanwhile, veteran Labour MP David Marshall formally quit the Commons yesterday due to poor health, sparking a by-election in Glasgow East.

The seat was held by a comfortable majority of more than 13,500 at the last General Election, supposedly making it one of the party's safest.

However, many MPs believe the Scottish National Party has a good chance of snatching victory. The mood has not been helped by the resignation of Ms Alexander, one of Mr Brown's closest allies, on Saturday – leaving the party leaderless in Scotland.

Strategists are understood to have pencilled in July 24 for the vote, apparently hoping to rush it through to prevent their opponents from building up momentum.

But the Tories are promising to increase the pressure on Mr Brown this week by forcing a Commons vote on Treasury plans for "retrospective" rises in road tax. Some Labour backbenchers also want the Government to rule out backdating increases to 2001.