David Cameron suffered a new setback as the Tory Party's lead over Labour dropped to just five points in the latest ComRes poll. It suggests that Labour would have 17 more seats than the Tories in a hung parliament.

The survey for Belfast Telegraph sister paper The Independent puts the Tories on 37% (down one point since last month), Labour on 32% (up one), the Liberal Democrats on 19% (unchanged) and other parties on 12% (unchanged). It is the Tories' smallest lead in the paper’s monthly poll since December 2008.

If repeated at a General Election, the latest figures would leave Gordon Brown 32 seats short of an overall majority in a hung Parliament. According to John Curtice, professor of politics at Strathclyde University, Labour would have 294 seats, the Tories 277, the Liberal Democrats 46 and others 33.

Such a result could pave the way for a deal between Labour and the Liberal Democrats that would keep Labour in power, with Nick Clegg's party supporting a Brown government in key votes. But it could provoke a major constitutional row, since the Tories would have won the battle for the popular vote but lost the election due to the first-past-the-vote system, which helps Labour.

The poll will add to the jitters in the Tory camp and on the financial markets, where the pound dropped yesterday amid fears that a hung parliament would make decisive action to cut the public deficit less likely. At one point, sterling fell to a nine-month low of £1.478 against the dollar.

Download poll results (PDF)