Blair aide was concerned draft dossier did not show military threat from Iraq

Jonathan Powell has built a reputation as one of the most influential figures in Downing Street who keeps the lowest of profiles. But yesterday, under an intense spotlight at the Hutton inquiry and relentless questioning from Richard Dingemans QC, the Prime Minister's chief of staff was forced to give the fullest account so far of No 10's involvement in the Dr David Kelly affair.

There was another, incendiary and potentially highly damaging disclosure for himself and the Government. Mr Dingemans, producing the latest ace from his deck of hitherto undisclosed official documents, revealed a memo Mr Powell wrote to John Scarlett, the chairman of the Joint Intelligence Committee, suggesting the dossier in its form at one stage would not sway a public doubtful of the military threat posed by Saddam Hussein.

Mr Powell also told the inquiry the Prime Minister had chaired a crisis meeting when news began to emerge that Dr Kelly was the source for the BBC reporter Andrew Gilligan's "sexed up" dossier claim.

In the e-mail to Mr Scarlett, who was in charge of compiling the dossier, on 17 September last year, Mr Powell wrote: "The dossier is good and convincing for those who are prepared to be convinced. [But] the document does not demonstrate a threat, let alone an imminent threat from Saddam. In other words, it shows he has the means, but it does not demonstrate that he has the motive to attack his neighbours, let alone the West."

A draft of the dossier, on 5 September, did not contain the claim that Saddam would be ready to launch chemical and biological attacks in 45 minutes. There were mentions of the alleged threat in a draft produced on the 11th, hedged with caveats. But the final version, unveiled by Mr Blair in the House of Commons nearly two weeks later, talked about the Iraqi leader being "ready" to launch chemical and biological attacks in 45 minutes.

Mr Powell said he, senior ministers and high-ranking officials met Mr Blair to discuss how the Government would handle Dr Kelly's admission that he had met Mr Gilligan and discussed the Iraq dossier. On 30 June, Dr Kelly had told his Ministry of Defence superiors of the meeting.

On 8 July, the MoD issued a statement saying a "middle-ranking" civil servant had admitted meeting Mr Gilligan. Dr Kelly's name was confirmed to journalists by the MoD on 9 July. Mr Powell said he had informed Mr Blair of the Kelly development on the night of 3 July in a phone call to the Prime Minister's hotel during a tour of the North-west.

Over the weekend, Mr Blair had been kept updated in his official residence at Chequers. Officials had discussed whether Dr Kelly would have to give evidence to the Foreign Affairs Committee (FAC), which had already taken evidence from Mr Gilligan. Then, Mr Blair believed they needed more information before deciding what to do, and asked for a "deeper analysis" of the differences between what Mr Gilligan and Dr Kelly were saying.

On 7 July, Mr Blair held the so-called running meeting at Downing Street. Attending were Mr Scarlett, Sir David Omand, the Cabinet Office intelligence and security co-ordinator, and Sir Kevin Tebbit, the MoD permanent secretary. The group was later joined by Jack Straw, the Foreign Secretary, and Alastair Campbell, Mr Blair's communications chief.

No minutes were kept of the No 10 meeting. But, from notes, Mr Powell said: "The PM wanted to know what we knew of Dr Kelly's views on weapons of mass destruction ... and what he would say if he appeared before the ISC (Intelligence and Security Committee) or FAC".

According to Mr Powell, Sir Kevin stated that while Dr Kelly agreed, on the whole, with the war he "might say uncomfortable things about specific items about which he had views". The meeting also decided Dr Kelly should be called back for a second interview. The inquiry had heard Dr Kelly had been assured the matter was closed after the first interview, when he was reprimanded for his unauthorised meeting with a journalist.

Mr Powell continued: "The Prime Minister said the MoD should continue handling the case following whatever internal processes were normal ... The Prime Minister made it clear ... that Sir Kevin and Sir David Omand should be in the lead at all times and nothing should be done with which they were not content."

Another meeting was held on 8 July at No 10 with Mr Blair, Mr Powell, Sir David, Mr Scarlett, Tom Kelly, the Prime Minister's official spokesman, and Mr Campbell. Mr Powell said they were told Dr Kelly did not expect to remain anonymous. "I think it must have been David Omand who mentioned that, on the basis of a conversation with Kevin Tebbit. We were told that had been discussed with Dr Kelly by the MoD."

Lord Hutton asked if any thought had been given to Dr Kelly's protection from the full glare of publicity. Mr Powell said: "I think from the very beginning it was the view of most of us, probably all of us ... that in the end this was going to become public."

Mr Powell said a draft of the MoD press statement about an official coming forward had been "scribbled" on by himself and Mr Campbell. He said those involved in the compilation of the statement were Sir Kevin, Mr Campbell, Tom Kelly, the Prime Minister's spokesman Godric Smith, Mr Scarlett and himself. "At the end of this exercise with Kevin Tebbit, I said to him expressly that you should take this back to the MoD, [but] you should not be bound by it," Mr Powell said. "It should certainly not be issued unless they were entirely and utterly confident with it, and I repeated this a number of times."

He contacted the MoD to ensure Dr Kelly was being "protected" from the glare of publicity, now his name was public. He said: "I think we were concerned; anyone in the eye of the storm in the press has a pretty tough time of it."