BBC chairman under fire after admitting Kelly was key source

The BBC faced a deepening crisis last night after admitting that David Kelly, the government scientist who apparently committed suicide, was the principal source of its claim that Downing Street "sexed up" a dossier on Iraqi weapons.

Although the BBC stood by its report, the admission cast doubt over the accuracy of its claim and relieved some of the pressure on Tony Blair as he vowed to battle through the worst weeks of his premiership.

Ministers, who have always believed Dr Kelly was the BBC's main source, now scent victory in their trial of strength with the BBC. They are confident that a judicial inquiry - to be set up today - will find that the BBC's claim, reported by Andrew Gilligan on the Today programme, was wrong.

Mr Gilligan said last night: "I want to make it clear that I did not misquote or misrepresent Dr David Kelly." He said Dr Kelly had expressed very similar concerns over Downing Street's interpretation of intelligence to BBC2's Newsnight, whose reports had never been questioned by Downing Street.

MPs have already called for Gavyn Davies, the BBC chairman, to resign. Ministers believe he rejected the advice of senior colleagues who wanted to stage a partial retreat at an earlier stage because he was determined to show he would not bow to government pressure despite his close links to the Labour Party. BBC sources denied any internal rift and dismissed speculation that "heads will roll."

The BBC's admission may give Mr Blair a much-needed breathing space before the inquiry, to be led by Lord Hutton, a senior law lord, reports in six to eight weeks. But the investigation will also have some searching questions for the Government - notably whether Downing Street tipped off the press about Dr Kelly's identity, thereby setting in train the events that led to his death.

Alastair Campbell, Mr Blair's director of communications, is expected to leave his post after the inquiry reports. Friends say he has lost his appetite for the job because of the tragedy but is determined to clear his name before he quits.

Richard Sambrook, the BBC's director of news, confirmed Dr Kelly was the principal source for Mr Gilligan's report. "The BBC believes we accurately interpreted and reported the factual information obtained by us during interviews with Dr Kelly."

He added: "We continue to believe we were right to place Dr Kelly's views in the public domain. However, the BBC is profoundly sorry that his involvement as our source has ended so tragically."

Mr Blair said he was pleased the BBC had made the announcement. "Whatever the differences, no one wanted this tragedy to happen. I know that everyone, including the BBC, has been shocked by it," he said.

But Labour MPs pointed out that Dr Kelly had denied telling Mr Gilligan key elements of his story. Eric Illsley, a member of the Foreign Affairs Select Committee, said the BBC allegations that Mr Campbell "sexed up" the dossier now appeared to have been "fabricated".

Gerald Kaufman, chairman of the Culture Media and Sport Select Committee, warned that the affair could have "serious implications" when the BBC's charter - and the licence fee - are reviewed in 2006.

Mr Kaufman said: "What is absolutely clear is that this whole series of events was started by the BBC story ... The inquiry, the role of Number 10, the role of the MoD and, I am sorry to say, the death of Dr Kelly."

The Tory Robert Jackson, Dr Kelly's constituency MP, demanded Mr Davies, Mr Sambrook and Mr Gilligan resign. "I believe the BBC are responsible for his death. If they had made this statement before his suicide I don't believe he would have died," he said.

Some senior BBC staff are thought to have had serious reservations on the timing of the admission. They argued that there would be anger at naming the scientist when he was no longer there to defend himself.

Dr Kelly's brother-in-law, Derek Vawdrey, accused the BBC of using a dead man to defend itself. He said: "It's all very well for the BBC to come out with this now, when David cannot answer back. So much for protecting sources.

"David was treated in the most despicable way by the Government, he was treated in a bullying way by the Foreign Affairs Select Committee and it is my opinion that is what directly led to his suicide."