Independence referendum: It's all yours Alex

Widening the already damaging rift between herself and the Prime Minister, Ms Alexander repeated her support for a vote on independence as a way of clearing up Scotland's constitutional future.

But then she went even further. Aware that the only option left open to her is to back the SNP's own referendum bill when it comes before the Parliament in two years' time, Ms Alexander said her party would "not vote down" a bill which gave Scots the chance to decide their future.

Labour's Scottish Parliament leader also insisted she would not resign, despite considerable private misgivings from her parliamentary party about the way this issue has been handled and a public warning from one former UK minister that her position was now "untenable".

Ms Alexander said that she "very much hoped" to be leading Labour in the Scottish Parliament at the next election and insisted that she was still "good friends" with Gordon Brown, despite the obvious differences between them on this crucial issue.

But it was on the SNP's own referendum bill that she really surprised both her colleagues and opponents. Ms Alexander said she would not give the SNP government "blank cheques" over the referendum, insisting that she would not decide whether to support the SNP's bill until it came before the Parliament.

However, she was clear that, on the principle of the referendum, the Scottish Labour group would not actually vote against the bill, though it could abstain. The abstentions of the Labour MSPs would be enough to give Alex Salmond the support he needs to get the bill through the Parliament.

Ms Alexander said: "We think the people of Scotland should be allowed to speak and we will not vote down the opportunity for Scots to speak but we will want to harry them (the Scottish Government] on things like what the question is, what the process is, and we think it is right that, after 30 years, Scotland should be given the chance to speak," she told BBC Scotland's Politics Show.

Ms Alexander's comments delighted the Nationalists and appalled her Unionist allies. Annabel Goldie, the Scottish Tory leader, said Ms Alexander had handed a comprehensive victory to the SNP. "She has given game, set and match to the Nationalists. It will be their plan, their timing – and their question," she said.

Nicola Sturgeon, the SNP Deputy First Minister, said Ms Alexander's concession represented "substantial gains" for the independence cause. She added: "The one thing that has been made clear by Wendy Alexander is Labour's concession of the right of the Scottish Parliament to consult the people on independence for Scotland."

A spokesman for the First Minister said: "As far as we are concerned, it is the best possible birthday present Labour could have given the Scottish Government."

Brian Wilson, a former energy minister, said if Ms Alexander had made this announcement without Downing Street support, which she has not secured, then her position was probably "untenable".

Labour MSPs refused to break ranks yesterday. Of 12 approached by The Scotsman, all gave their public support to Ms Alexander and several said they would not comment in any way on the referendum issue. However, David Cairns, the Scotland Office minister, said he was "entirely at one" with Ms Alexander on the referendum issue.

He admitted the chaos over the referendum issue had meant it had "not been a good week" for Labour. Mr Cairns said: "They (Scottish Labour] have the right, as Wendy Alexander said, and I respect that right, to decide on the tactics and the timing of these issues."

Yesterday's development marked the latest twist in what has been an extraordinary week of policy announcements, confusion and U-turns within the Labour Party – played out in public, to the consternation of its MPs and MSPs.

Ms Alexander started the controversy when she made it clear that she wanted a swift resolution to the independence issue. "Bring it on," she declared.

Ms Alexander had spoken to Mr Brown on the issue before she made her announcement, but the Prime Minister had yet to make up his mind on whether to support it or not. Ms Alexander continued to push her cause all week, first by suggesting she might table a Labour bill calling for an early referendum. But, as her support for a referendum strengthened, so Mr Brown started to distance himself from it.

The Prime Minister spoke to Ms Alexander during the week but, instead of getting the support she had hoped for, Mr Brown backed away, leaving her isolated and damaged.

Ms Alexander's humiliation looked complete by the end of the week when the Labour Party issued a statement which appeared to abandon key elements of her policy. It coincided with a declaration from the Prime Minister, warning he was "not persuaded" of the case for a referendum and would do "whatever is necessary" to defend the Union.

With Labour MSPs and MPs grumbling openly about the disastrous way in which the issue had been handled, it appeared as if Ms Alexander had no option but to accede to the Downing Street line and drop the whole idea. But, after spending two days in strategy meetings with aides and liaising with senior figures in London, she decided to push on with her policy initiative, even though it was not backed by the Prime Minister.

One more little stumble and it'll be her last as Labour leader

IS Wendy Alexander finished as Labour's Holyrood leader? Not quite, but almost.

She can pull her career round, but it will need a major change of approach, better advice and a steadier grip on her party to do so.

If this furore over the independence referendum had been the first problem to afflict her leadership, she could have emerged with just a large dent to her reputation.

But it is nowhere near the first crisis she has been in – and the effect is cumulative.

She has only been in the job since September last year but, in eight months, she has lost one spin doctor and another press officer, she has become embroiled in a scandal over an illegal donation which almost brought her down and she has managed to cause the biggest policy rift in the Labour Party since devolution.

On top of that, her performances at First Minister's Questions have hardly ever been effective – and on some occasions almost embarrassing.

Not all of this is her fault. Anybody would find it tough going up against the experienced and skilful Alex Salmond, leading a government that is riding high in the polls.

The donation which caused the problems was not actually solicited by her, but by one of her colleagues and, to some extent, she has been left dangling over the referendum by the dithering of the Prime Minister.

But the central problem here is one of perception. Ms Alexander appears to stumble from crisis to crisis and so she becomes the story, not the policies she is advocating.

There is only so long that a leader can hang on once their survival becomes the story.

Her MSPs are concerned. They have started talking about the problems she is having and the very first traces of suggestions of possible replacements are being whispered.

These are, as yet, nowhere near loud enough to be an immediate threat but if Ms Alexander has any more crises, if she was to lose another spin doctor, or she was to become involved in any more financial troubles, then she would be finished.

She has used up all her political lives. One more slip and she is gone.

Independence vote timescale

THE SNP set out its timescale for a 2010 referendum on Scottish independence yesterday.

A Bill introduced in January 2010 could complete its first parliamentary stage by spring; the final stage could be cleared and royal assent granted by summer, the referendum taking place in autumn. That will be after the next Westminster general election, for which the latest possible date is June 2010.