The former Tory donor and multi-millionaire Arron Banks has announced he is upping his Ukip donation to £1 million to spite the Conservatives, after William Hague made a joke at his expense.

Mr Banks' announcement, made alongside the Ukip leader Nigel Farage, came as David Cameron delivered a blunt warning to disillusioned Conservatives that a flirtation with Ukip at the next general election could lead to a Labour government.

Mr Farage's riposte came just hours later, when Mr Banks explained he had decided to increase his donation from £100,000 to £1 million pounds after William Hague, the Leader of the Commons, dismissed the significance of his defection.

Mr Banks, who runs the insurance company Go Skippy, has previously funded the Tories to the tune of £250,000, Ukip claimed, although that figure was disputed by the Conservatives.

Mr Hague had told the BBC: "I have never heard of him, so we are not going to get too upset about that."

"It’s certainly not going to overshadow the Prime Minister’s speech today that someone we haven’t heard of has gone to Ukip."

In pictures: The rise of Ukip Show all 8 1 /8 In pictures: The rise of Ukip In pictures: The rise of Ukip 1993: Alan Sked forms Ukip History professor Alan Sked had been active in anti-EU politics for a while beore he founded Ukip in 1993. He resigned from the party after the 1997 election, concerned that it was attracting far-right members, and has been critical of Ukip since. Picture: Reuters Reuters In pictures: The rise of Ukip 2005: Kilroy defects Former TV presenter Robert Kilroy-Silk founded Veritas in 2005, after a failed bid to become leader, and took many of Ukip's elected members with him. But the party slowly lost its popularity and didn't put forward any candidates in the last election. Picture: REUTERS/Kieran Doherty REUTERS KD/RUS In pictures: The rise of Ukip 2010: Farage becomes leader, again Farage had led Ukip from 2006 until 2009, when he stood down to fight against the Speaker, John Bercow, for his Buckingham seat. He failed to win the election and returned to lead the party in November 2010. Picture: REUTERS/Kieran Doherty REUTERS/Kieran Doherty In pictures: The rise of Ukip 2010: Ukip fights for election Nigel Farage was injured in a plane crash on polling day in the 2010 general election, but his party increased its success in the votes. It fielded 572 candidates and took 3.1% of the vote, though failed to win any seats. REUTERS/Darren Staples REUTERS/Darren Staples In pictures: The rise of Ukip 2013: Eastleigh gains Ukip's candidate Diane James got the highest ever number of votes for any candidate from the party, but was beaten by the Liberal Democrats. The surge in support gave Ukip confidence ahead of local and European elections later in the year. Picture: Reuters In pictures: The rise of Ukip 2013: Bloom kicked out Godfrey Bloom, who served as an Ukip MEP from 2004 to 2014, had the whip withdrawn in 2013 after sexist comments and an attack on a journalist. He sat as an independent MEP until 2014, when he ended his term in office. Picture: REUTERS/Luke MacGregor In pictures: The rise of Ukip 2014: European election success Ukip got a higher proportion of the vote than any other party in 2014's European elections, adding 11 new MEPs and taking its total to 24. REUTERS/Luke MacGregor In pictures: The rise of Ukip 2014: Carswell defects Douglas Carswell defected from Ukip at the end of August, and was followed by Mark Reckless at the end of September, who resigned from the Tories amid rumours of many more defections to come. Picture: REUTERS/Toby Melville

The huge donation was the latest in a series of announcements by Ukip designed to disrupt the Tories’ final party conference before the general election.

Over the weekend Mark Reckless followed fellow MP Douglas Carswell in jumping ship and triggering Commons by-elections and speculation dogged the conference that a third Tory MP could be about to follow suit.

Explaining his decision to increase the donation, Mr Banks told reporters he “woke up this morning intending to donate £100,000 to Ukip”.