Prime Minister Helen Clark today said she accepted Peter's statement that he only found out about the donation from his lawyer on Friday night.
"Obviously it's embarrassing for Mr Peters because he had been very adamant that that money had not gone to him or his party," she said on TVNZ's Breakfast programme.
"In his position, I'd be embarrassed if that was what I was told after making clear denials.
"However there is a distinction between whether someone gives to a party, whether someone gives to a person and whether someone gives to there expenses."
On that basis the donation did not appear to have broken any rules, she said.
"A legal defence fund is one thing. Someone giving you money for your own purposes or electoral purposes is another and Mr Peters would not be the first member of Parliament to have people contributing to legal costs."
Mr Peters admission followed a Weekend Herald story on July 12 showing Mr Glenn had said in emails that he had donated money to New Zealand First.