Vote-rig Labour MP in new smear row: Tom Watson's allies called rival candidate a terrorist supporter and he helped his girlfriend get a neighbouring seat MP's allies accused of falsely claiming rival candidate is 'terrorist supporter' Candidate Ansar Ali Khan's main opponent is Tom Watson's friend and ally Watson is also accused of meddling to help his girlfriend become candidate Controversies follow his resignation as elections campaigns co-ordinator By Simon Walters and Glen Owen Election backing? Tom Watson MP with his girlfriend Stephanie Peacock who has become Labour candidate in the parliamentary constituency next door to his own Labour MP Tom Watson was caught up in a new dirty tricks row last night after it was claimed that his allies smeared an ethnic minority Labour candidate in a selection battle with one of his closest friends. Mr Watson's allies are accused of falsely claiming Labour candidate Ansar Ali Khan is a "terrorist supporter" to stop him becoming a Labour Euro MP. Mr Khan's main opponent in the Labour selection contest in the West Midlands is former Labour MP Sion Simon, a long-standing friend and ally of Mr Watson. The result of the fiercely fought Labour battle in the West Midlands will be announced at the end of this month. The Mail on Sunday can also disclose that Mr Watson has been accused of meddling to help his 26-year-old girlfriend become Labour candidate in the parliamentary constituency next door to his own. Activists in Halesowen claim Mr Watson, 46, used his influence to help Stephanie Peacock win selection last month. The constituency directly borders Mr Watson's West Bromwich seat. The new controversies follow Mr Watson's resignation as Labour's election campaigns co-ordinator after claims of fraud in the contest to pick a Labour parliamentary candidate in Falkirk. The Unite union, run by Mr Watson's close ally, union baron Len McCluskey, has been accused of breaking rules to try to rig the contest in favour of Unite official Karie Murphy. Ms Murphy is very close to Mr McCluskey and is Mr Watson's Commons office manager. Labour leader Ed Miliband has handed a Labour investigation into the Falkirk scandal to police. The row has focused attention on the role of unions, backed by powerful Mr Watson, over the choice of Labour candidates. They are accused of using foul play to increase the union stranglehold over the Labour Party. Mr Watson and McCluskey maintain they have done nothing wrong and are victims of a plot by anti-union Labour MPs. The row over the alleged smear against would-be Labour MEP Mr Khan follows claims that supporters of Mr Watson have tried to sabotage his Euro campaign by suggesting he expressed "support for terrorism" in a video of a rally in Pakistan. This newspaper has been told by an authoritative source that an ally of Mr Watson said: "Khan has supported terrorism and this needs to be exposed." Rivals: Sion Simon (left) and Ansar Ali Khan (right) are battling to become a Euro MP A senior Labour MP said: "Watson's supporters have been involved in a crude attempt to destroy Mr Khan to get the seat for Sion Simon." In fact, the allegation against respected Mr Khan, whose Euro MP bid is supported by Labour Shadow Cabinet member Liam Byrne, was investigated by the Labour Party years ago and found to be "baseless mischief-making" by political enemies. It relates at a video of a 1989 rally in Pakistan attended by Mr Khan. It celebrated the release of Haji Abdul Hameed, arrested by India in 1985 for alleged terrorist activities but released four years later after pressure from the British Government. Mr Khan's Pakistani family's native Kashmir is the subject of a long running territorial dispute between India and Pakistan. In the video Mr Khan is said to have called for "vengeance" against India. Quit: The controversies follow Mr Watson's resignation as Labour's election campaigns co-ordinator Mr Khan, who is in his 40s, said he made the speech as a "passionate student" but denied supporting terrorism. The married father of three is a law graduate, magistrates and has been a councillor since 2002. Under the "list system" for Euro elections, only the top two West Midlands Labour candidates have a good chance of becoming MEPs. Mr Khan's main rival, Sion Simon, was a Labour MP until 2010. He resigned hoping to become Labour Mayor for Birmingham under new laws for elected city mayors, also with Mr Watson's support. But his hopes were dashed when residents voted not to have a mayor. Mr Watson is listed as one of Mr Simon's supporters on his Euro campaign website. Mr Simon is also backed by Len McCluskey's Unite. The ballot for the Labour Euro candidate selection contest in West Midlands closes on July 31. Backing: Sion Simon is also backed by Len McCluskey's (left) Unite, while Labour MP Liam Byrne (right) has endorsed Ansar Ali Khan Mr Khan's campaign manager Brian Knott said last night: "If anyone is trying to use a 23-year-old piece of film taken out of context to try to damage Ansar, it is totally unacceptable. He is a long-standing councillor known for his integrity and hard work in bringing communities together. He is a fantastic Labour candidate. 'Watson's supporters have been involved in a crude attempt to destroy Mr Khan to get the seat for Sion Simon' A senior Labour MP Endorsing Mr Khan, Labour MP Liam Byrne said: "Ansar is an unrivalled campaigner and politician who believes action speaks louder than words. He is just what we need fighting for us in Europe. There is no suggestion that Mr Watson or Mr Simon are involved in the smears. Mr Watson is also facing questions over the role he played in the selection of a young colleague with whom he has been romantically linked. Stephanie Peacock, a political officer for the GMB union, last month won selection for the plum Midlands seat of Halesowen. She stands a strong chance of entering the Commons in two years by the age of 28. Last week, a leaked Unite document named Ms Peacock as one of the 41 candidates the union plotted to install in winnable constituencies. Her selection proved controversial locally because - as in Falkirk - she benefited from the imposition of an all-women shortlist, despite the protests of some local party members. The shortlist was imposed in February - the same month that she took up her GMB position. The union is the largest donor to the Halesowen constituency party. Sources say Mr Watson played "an active role" in backing her selection. Eyebrows were raised because Mr Watson was reported last summer to have formed a romantic friendship with Ms Peacock after they appeared together at two Labour weddings, including the marriage of Unite-backed Labour MP John Cryer - who sponsored a Commons pass for her. There is no suggestion that the rules were broken in Halesowen. Some activists claimed Mr Watson had "meddled" in the process. The reports came just four months after Mr Watson announced he had split from his wife Siobhan after 11 years of marriage. Mr Watson said no one else was involved and blamed the pressures of leading the campaign to expose alleged phone hacking at Rupert Murdoch's News International. Mr Watson has never publicly commented on his friendship with Ms Peacock. Ms Peacock, who previously dated Alex Belardinelli, the spin doctor for Ed Balls, was politically precocious. Aged 16, she was the only person in a BBC Question Time audience to offer support to Tony Blair over his policy of top-up fees for university students. A newspaper account at the time described her as "just about perfect . . . state-school educated, mother working for the National Health Service, father a salesman. Teenager. Photogenic. The following year she became the darling of the Labour conference in Brighton. Mr Blair told her that she had a "promising" career ahead of her. In 2007, while a student, she introduced Gordon Brown at the launch of his unopposed Labour leadership campaign, saying: "He has the experience, the values and the vision for our country." During the 2010 Labour leadership contest she backed Mr Balls, saying he would "defend our vital link with the unions whenever it comes under attack." And in 2011 she called on Labour to back a general strike in the public sector, saying: "We should actively support the workers who have decided to withdraw their labour." She is also a member of Labour's National Policy Forum. Mr Watson did not respond to calls. The Labour Party declined to comment. Tom Watson was at the centre of a riddle last night over his Commons aide, who has been suspended from the Labour Party by Ed Miliband over the Falkirk seat-rigging scandal. Former union official Karie Murphy (pictured right), in line to be Falkirk Labour candidate until she was barred by Mr Miliband, works as Mr Watson's office manager and her name is on a plate on his office door. Yet official Commons records give the impression she is employed not by Mr Watson, but by Blaydon Labour MP, David Anderson. Her entry in the staff register of interests says Mr Anderson has supplied her Commons pass. It makes no reference to Mr Watson. There is no mention of Ms Murphy on Mr Watson's Commons register. Tory MP Henry Smith said last night: "Tom Watson must give full details of his employment at the Commons of Len McCluskey's candidate for the rigged parliamentary selection contest." Mr Anderson claimed Ms Murphy worked for him "one day a week." He said she was paid from his Commons expenses. Mr Anderson added that claims he had agreed to provide a pass for Ms Murphy so she could work for Mr Watson in return for help from Mr Watson's allies in ensuring he can help his Commons office manager, Paul Foy, succeed him as Blaydon Labour MP, were "totally untrue." Neither Mr Watson nor Ms Murphy could be contacted last night to respond to questions. Miliband has got to restore trust - or pay the price Comment by DAVID BLUNKETT Former Labour Home Secretary This is all the more reason for Ed Miliband to reclaim the moral high ground by introducing changes which would eliminate any suggestion of vested interests.