Blair cleared, BBC battered but 'whitewash' claims grow

• Hutton clears PM of any wrongdoing and heavily criticises the BBC

• MoD mildly criticised for not telling Dr Kelly his name was to be released

• BBC chariman Gavyn Davies resigns after 'defective' editorial decisions

Key quote: "I am satisfied there was not a dishonourable or underhand or duplicitous strategy on the part of the prime minister and officials to leak Dr Kelly's name covertly." Lord Hutton.

Story in full: LORD Hutton shocked Westminster yesterday when he delivered his long-awaited report into the death of David Kelly, opting to blame the BBC - and not the government - for the crisis surrounding the suicide of the weapons’ inspector.

MPs had been primed to expect the Law Lord to censure Tony Blair and his Defence Secretary, Geoff Hoon, severely.

Instead, he plunged the BBC into chaos by exonerating the government and criticising the BBC in general, and Today reporter Andrew Gilligan in particular, for a catalogue of failings.

Even Labour MPs were taken aback by the tone of the report - some going as far as calling it a "whitewash".

Within hours, the first casualty was Gavyn Davies, the chairman of the BBC, who resigned after Lord Hutton’s verdict that the BBC had made a series of "defective" editorial decisions.

But Mr Davies used his resignation statement to articulate the disbelief felt by many at the apparently one-sided nature of Lord Hutton’s conclusions.

In a comprehensive and shaming criticism of the way the corporation operates, Lord Hutton said the allegations first made by Mr Gilligan that the government had "sexed up" its intelligence dossier on Iraq were "unfounded".

The allegations by Mr Gilligan - based on a conversation with Dr Kelly - provoked Alastair Campbell to wage a furious war with the BBC as he demanded the retraction of the story.

Dr Kelly took his own life in July last year, after being exposed as the source of Mr Gilligan’s report.

Lord Hutton cleared Mr Campbell yesterday, preferring to focus his criticism on the conduct of the BBC management. He said the BBC failed to ascertain the accuracy of Mr Gilligan’s journalism before joining battle with No 10.

In a strongly-worded passage of his 320-page report, Lord Hutton concluded that the duty of the BBC governors to protect BBC independence was "not incompatible with the duty to investigate Mr Campbell’s complaints".

There was a single, mild rebuke of the Ministry of Defence - for failing to inform Dr Kelly that the press office was preparing to confirm his name to journalists. But Lord Hutton even tempered his criticism by listing three mitigating factors for the MoD’s actions.

By contrast to his heavy-handed criticism of the BBC, Lord Hutton cleared Mr Blair of lying about his involvement in the naming of Dr Kelly.

"I am satisfied that there was not a dishonourable or underhand or duplicitous strategy on the part of the part of the Prime Minister and officials to leak Dr Kelly’s name covertly," the judge found.

A vindicated Mr Blair immediately called on Michael Howard, the leader of the opposition, to withdraw his claim that the Prime Minister had lied about his role in releasing Dr Kelly’s name to the media.

"The allegation that I or anyone else lied to this House or deliberately misled the country by falsifying intelligence on WMD is itself the real lie," Mr Blair told the House, clearly relishing the sudden change in his political fortunes since Tuesday’s narrow victory on top-up fees.

Sidestepping calls for an apology, Mr Howard indicated the public might not be so quick to absolve the Prime Minister. "No-one in government can look back on this episode with pride. The nation will, in due course, deliver its verdict," he said.

Last night, the BBC was still assessing the implications of the report amid concerns for its Charter renewal, editorial independence and future funding system.

In a rearguard action, Mr Davies questioned publicly the findings: "First, is it clearly possible to reconcile Lord Hutton’s bald conclusions on the production of the September 2002 dossier with the balance of evidence that was presented to him during his own inquiry?

"Second, did his verdict on Mr Gilligan’s reports take sufficient account of what was said by Dr Kelly on tape to Susan Watts?

"Third, did his criticisms of the BBC take sufficient account of the extenuating circumstances which were created by the public attacks on the BBC during and after the war?

"Finally, are his conclusions on restricting the use of unverifiable sources in British journalism based on sound law and, if applied, would they constitute a threat to the freedom of the press in this country?" he said in his resignation statement.

The complaint was echoed by Austin Mitchell, the Labour MP, who accused Lord Hutton of using "buckets of whitewash".

"I have been fascinated to read the Hutton report. Ultimately, it disappoints because it is very one-sided. I have just one question: Did Hutton buy his buckets of whitewash from the same source as [Lord] Denning," he said.

The Prime Minister left it to his former communications director Alastair Campbell to demand retribution from the BBC. In a statement, Mr Campbell demanded "several resignations at several levels".

"I no longer work for the government so, in a sense, my view on these matters is no more or less significant than anyone else’s," said the former spin doctor.

"But I do feel compelled to say this: If the government faced the level of criticism which today Lord Hutton has directed to the BBC, there would clearly have been resignations by now. Several resignations at several levels.

"The BBC will have to decide for itself what action to take to restore its own integrity and reputation after such severe criticism of the governors, management, senior editorial staff and processes."

Lord Hutton’s findings appeared to throw the BBC into chaos. Greg Dyke, the director general, released a bullish statement saying that although the BBC would apologise for "certain" allegations made by Mr Gilligan ... "we would point out again that at no stage in the last eight months have we accused the Prime Minister of lying and have said this publicly on several occasions".

Mr Dyke suggested no resignations would be considered until after the governors had met.

But less than an hour afterwards the BBC was reporting that Mr Davies would be standing down.

A statement on behalf of Dr Kelly’s family said: "If their personal tragedy is not to be compounded, they urge that, regardless of any criticism or exoneration in the report, the government takes action to ensure that the ordeal suffered by David Kelly will never be repeated.

"No other person should have to suffer the pressure that he experienced."