Deep splits at the heart of Ukip burst to the fore again today as a leadership hopeful accused major donor Arron Banks of trying to use the party as a “puppet”.

Councillor Lisa Duffy said the reliance on cash from Mr Banks, a close ally of former leader Nigel Farage, was “not healthy” for the party.

The tycoon, who has pumped more than £1m into Ukip and backed the Ukip-affiliated Leave.EU campaign to the tune of £5.6m, recently suggested he could support a new party.

Ms Duffy, who is up against four other candidates for the leadership, argued Mr Banks’ dominance in Ukip funding risked setting the “tone” of its operations.

Speaking after a hustings in Wales today, Ms Duffy said Mr Banks was “trying to use” the party as a “puppet”, although had so far failed to secure its submission.

“But that is something that could potentially happen down the road, and it's a 'no no' from us," she added.

"The danger of only having one donor is that one person then could put the pressure on the party to ask and demand for things to happen, so they basically can use the party as their puppet,” she said.

"I think that is really dangerous. I think what is very important for our party is that we get donations from all over, whether small donations or large.

"We shouldn't allow one individual to actually set the tone of our party. Our tone is set by our grassroots.”

Mr Banks accused the party’s NEC of an attempted “coup” after it blocked Steven Woolfe from standing in the contest after he submitted his papers late.

The insurance businessman said Ukip needed “root and branch” reform and hinted that he could be tempted to back a new party.

Ms Duffy said: "When they don't get their own way, they start calling to scrap the NEC, 'let's go off and build a new political' party. No.

"We've spent 23 years building up UKIP. UKIP is fantastic. UKIP's here for the future. It's not the puppet of one man."

MEP Bill Etheridge, who is also standing in the race, told the BBC after the hustings: "No one person, no one man or woman, is any more important than any other member.

"If we're going to be a different party we cannot allow people to buy us. I don't care if it’s Mr Banks or anybody else. They don't buy UKIP."

The party has been beset by infighting since new assembly members were elected in Wales and after Mr Farage stepped down as leader and triggered the contest for his succession.

Yesterday Nathan Gill, the party’s leader in Wales, announced he would sit as an independent in the Assembly since the rows had become a “distraction” from his work.

Welsh Ukip chairman Chris Smart said there was a feeling the party was “almost unravelling” and could face an outpouring of members.