By Nick Assinder
Political correspondent, BBC News
Ruth Turner's arrest appears to have sent shockwaves of surprise through Downing Street.
The investigation looks set to cloud Mr Blair's final days in office
And it is certainly being seen in Westminster as another serious development in the cash for honours row that is casting a long shadow over Tony Blair's final months as prime minister.
It is not just the fact that this is now the fourth arrest in an investigation which was once seen as likely to go nowhere fast but has now even seen the prime minister questioned.
It is the fact that, for the first time, the issue of perverting the course of justice has been added to the police inquiry.
And Ms Turner is at the very centre of the Downing Street machine - her role could not be more pivotal, particularly with relations between No 10 and the Labour party.
This once again suggests that the inquiry - far from running out of steam - may well be widening.
The prime minister and all those involved have denied any wrongdoing and Mr Blair has offered full support to Ms Turner, who has also robustly denied anything wrong.
But, right at the start of this affair, the prime minister also said the buck stopped with him and that he would take ultimate responsibility for what happened.
At that point, it has to be said, many believed this inquiry, sparked by the SNP, would quickly evaporate and may not even proceed at all.
But the police have treated all the allegations with full seriousness and, as leading officer, Metropolitan Police Assistant Commissioner John Yates recently announced, "significant and valuable material" has been gathered.
Now the prime minister has seen his closest aides - personal friend and fund raiser, Lord Levy, and director of government relations, Ms Turner, amongst others - arrested and questioned.
And that puts the inquiry about as close to Mr Blair as is possible to be.
Part of the surprise at the latest development stems from the fact that, before Christmas, there had been speculation that the investigation was nearing its end and that there was little prospect of charges.
That has immediately led to fresh speculation that there may well indeed be charges - a move that would represent the most serious development possible for the prime minister.
His looming departure is already being overshadowed by the Iraq war.
If any charges are finally laid in the cash-for-honours affair it will be the final blow to any hope he can leave Downing Street in the heroic manner his aides once attempted to map out.
Public confidence in, and respect, for politicians of all parties was already at a pretty low ebb before the cash for honours affair began and it has only added to those negative feelings.
There is now a growing belief, exploited by Mr Blair's opponents, that the New Labour government is as "sleazy" as John Major's previous Conservative government.
This is an echo of the "sleaze" line of attack deployed by Labour spin doctors before the 1997 general election, to devastating effect.
Whoever replaces Mr Blair - and few if any now doubt that will be Gordon Brown - will now have as one of his first and most pressing jobs attempting to rebuild that relationship between voters and politicians.