Republican's campaign accuses Obama of giving favours to donors in attempt to divert attention from Bain Capital questions

Republican presidential challenger Mitt Romney made a determined effort to deflect attention from the damaging controvery over Bain Capital by mounting an attack on what his campaign described as Barack Obama's Chicago-style cronyism.

A rare round of TV interviews by Romney on Friday failed to put the Bain story to rest over the weekend: in a Fox interview on Monday, he pressed a new line of attack, claiming that the Obama administration had given favours to businesses that had donated to his campaign.

"I think it stinks to high heaven and I think the administration needs to explain how it is they would consider giving money to campaign contributors' businesses," Romney said.

The Romney campaign is trying to wrest back the initiative before the candidate leaves next week for the opening of the Olympics in London and a trip to Israel.

The Obama camp dismissed his allegations of cronyism and insisted Romney was simply trying to divert attention from the Bain row, which centres on his role with the company between 1999 and 2002 when it was laying off US workers and shipping jobs overseas. He says he was running the 2002 Salt Lake City Winter Olympics at the time and was not involved in decision-making at Bain after February 1999.

One of Romney's senior advisers, Ed Gillespie, in a telephone conference with reporters, said Obama had brought "Chicago-style politics" to DC, with favours for people with political connections.

The Romney campaign did not offer the names of any specific individuals or companies.

Romney, in the Fox interview, said: "If you're a campaign contributor to Barack Obama your business may stand to get billions or hundreds of millions of dollars in cash from the government. I think it's wrong."

Jennifer Psaki, an Obama spokeswoman, said Romney was trying to avoid questions about Bain.

If the Bain controversy persists, Romney may have to find a strong storyline to supplant it, such as bringing forward the announcement of his vice-presidential pick.

New York Times reporter Jeff Zeleny said friends of Romney believe he has made his decision and will announce before heading to London for the opening of the Olympics at the end of next week. Until now the Romney campaign has said only that he will make the announcement before the Republican convention at the end of August.

The shortlist of candidates most widely mentioned includes senators Rob Portman of Ohio, John Thune of South Dakota and Marco Rubio of Florida, former Minnesota governor Tim Pawlenty and congressman Paul Ryan, and Louisiana governor Bobby Jindal. The Drudge Report last week reported former secretary of state in the Bush administration Condoleezza Rice is among the top contenders.

Thune, in an interview with the Hill Congressional newspaper, disclosed that he had visited Boston to meet Romney's staff, including Beth Myers, who is in charge of vetting vice-presidential candidates.

He was among potential running-mates and donors invited to a Romney weekend retreat in Park City, Utah, last month. Jindal was among those giving a presentation at the retreat. Rice was also at the retreat and her speech on foreign policy was cited by some of those present at the highlight of the weekend.

Jindal was fundraising in Louisiana with Romney on Monday. Another potential VP pick, Portman, was out campaigning on Romney's behalf in Ohio Monday to coincide with Barack Obama's visit to the state. Like Thune, Portman has admitted to meeting Myers.