The Conservative leader took a huge gamble backing Jeffrey Archer and Michael Ashcroft - it backfired in spectacular fashion
It could hardly have been worse for William Hague yesterday. He opened the morning papers to find a beaming Michael Portillo making clear his intention to return to the limelight sooner than everyone expected. There was the former defence minister basking in the only moment of glory in the Conservatives' recent history while Hague was reeling from the grimmest week of his leadership.

He tried to put a brave face on it as he addressed the blue-rinse brigade at the party's women's conference in Solihull yesterday. But nothing could disguise the humiliation of a week dominated by the controversies surrounding two of his top lieutenants, Jeffrey Archer and Michael Ashcroft.

The "A-Team", as they were cruelly dubbed by the Cabinet Office minister Ian McCartney, had been Hague's biggest gambles. Because of the lack of talent that remained in the shell of the Conservative Parliamentary Party after their election defeat, the Tory leader had been forced to turn to the past and allow Lord Archer, the millionaire novelist with the questionable history, to stand in the internal election to find the party's candidate for the London mayoralty.

Michael Ashcroft, the Tory treasurer, had not only turned round the party finances but ploughed huge sums of his own money into the Conservatives' coffers. The cost of riding the recent allegations against him, all of which have been denied, was one that the Tory leader was prepared to pay.

With Archer, Hague the gambler had put everything on red ... and it came up black; with the chips down for Ashcroft as well, Hague's leadership now depends on luck - and whether Michael Portillo keeps his vow of loyalty to the leader.

JUST A week ago, Hague and his party appeared to have reached a turning point. The Tory leader had delivered a witty and devastating riposte to the Queen's Speech. Labour continued to shoot itself in the foot over the London mayoral contest as a party selection committee found no way of excluding Ken Livingstone from its shortlist. And, according to an ICM survey, the Government's seemingly invincible 20-point opinion poll lead had been cut to 10 points.

Even Hague's detractors were willing to admit he had engineered a turnaround in Tory fortunes. However, all the subtle success of Hague's media strategy was thrown into disarray a week ago on Friday when Lord Archer of Weston-super-Mare telephoned him to warn of the News of the World's damaging revelations.

Hague was furious with the position Archer had placed him in and saw Archer's immediate resignation as mayoral candidate as non-negotiable. Ever the optimist, Archer clung on until Saturday, trying to convince others that his concocted alibi was unimportant because it was not relevant to his 1987 libel case against the Daily Star.

A party member who worked closely with Archer when he was deputy party chairman said: "The trouble with Jeffrey was that he never realised that the old adage - tell one lie and you've got to tell another - is always, invariably and without exception true."

By last Saturday afternoon, faced with the knowledge that he would be pushed by Hague if he didn't jump, Archer issued a statement in which he claimed he had been forced to ask a friend to give him a false alibi when it appeared that a close female companion might be dragged into the court case he had brought against the Star for accusing him of sleeping with the prostitute Monica Coghlan.

WHEN HAGUE returned from his constituency home in Richmond, North Yorkshire, on Monday he was calm but incensed. An aide said: "He found it hard to comprehend that Archer had jeopardised the party's recovery by blatantly lying to both his and Michael Ancram's face.

"It's just not right to say we didn't put all the rumours to him. Michael Crick [the journalist who wrote an unauthorised biography of Archer] may claim to have more but, if so, why didn't he publish it so we could have had something to investigate?"

Hague was also stung by headlines that questioned his leadership qualities for allowing Archer to go forward, the aide said. "The fact is we had nothing on him. He'd won a libel case. Two or three DTI inquiries had failed to pin anything on him and all the other half-truths and inventions weren't worth turfing him out for and risking a legal challenge - which he was quite capable of instigating."

By the end of a strategy meeting on Monday Hague had decided to regain the initiative. Lord Mackay of Ardbrecknish, the Tory Chief Whip in the Lords, was told to withdraw the

whip from Archer, who was also to be referred to the ethics and integrity committee.

"Both courses of action were to ensure the news bulletins led with clear signs that Hague was taking quick and decisive action," the aide explained. But the attempt to grab the headlines was short-lived. Scotland Yard confirmed that Detective Superindent Geoff Hunt, of the specialist operations unit, was to start investigating the Archer case. The significance of Hunt's appointment was not lost on Hague: he was the officer responsible for building the case that led to the Conservative former minister Jonathan Aitken being jailed for perjury.

JUST WHEN Hague and Ancram thought things couldn't get worse, Tom Baldwin, the deputy political editor of the Times, began making inquiries about donations of pounds 86,000 a month that the Tory treasurer, Michael Ashcroft, was making to the party from the Belize Bank Trust Ltd. Didn't this represent a donation from an offshore trust? Wasn't Ashcroft, therefore, a foreign donor? And didn't that mean that Hague had not met his pledge to ban financial donations from abroad?

Baldwin's inquiry lit the blue touch-paper. The normally charming and urbane Ancram "went off the scale". The party had been receiving warnings for several weeks that Central Office was being targeted by hackers or "bin men" (people who rifle rubbish for documents) to get more "dirt" on Ashcroft.

The Times story appeared to prove that Central Office's computer security had been breached. Even the notion that such tactics might have been employed offended Ancram's patrician sense of fair play and was the last straw in what he saw as an unwarranted smear campaign against Ashcroft.

Hague was brought in to consider the tactics and agreed with Ancram that "enough was enough". A classic rebuttal strategy would have seen Ancram appear on BBC Radio 4's Today programme and calmly point out that Ashcroft was registered to vote in Maidenhead; that the "trust" was just a conduit for Ashcroft in a bank he owned; and that the Labour Party had at least five high-value donors to whom the same criticism could apply.

Instead Ancram added fuel to the story. He announced a complaint had been lodged with Scotland Yard that Central Office computers had been hacked into and he accused the Times and the Labour Party of orchestrating a smear campaign using dirty tactics.

Archer was pushed to the wings as the Ashcroft saga again took centre stage. To add insult to injury it transpired that Ashcroft's charity, Adlearn Foundation, had been closed down after what the trustees described as "hounding" by the Charity Commission over a discrepancy between the foundation's accounts and those of the Adlearn City Technology College it supported. Comparisons were immediately drawn with the Archer affair. Again, Hague was said to have ignored warnings.

And then on Thursday fresh allegations were made against Archer, when the journalist Adam Raphael, who had been a witness in the Daily Star libel trial, claimed in an article in the Economist that Archer had pressured him to change his evidence as part of an elaborate web of deceit designed to cover his movements on and around the date he was alleged to have slept with Ms Coghlan.

Archer made his first public apology over the issue and said in a note to Robert Halfon, a member of his mayoral campaign team: "I could write pages expressing my sorrow, but for now I simply want to apoligise for having let you down." Sadly, the novelist couldn't even spell the word "apologise", leading to yet another round of embarrassing stories.

It may be appropriate that Lord Archer's forthcoming novel is entitled To Cut a Long Story Short. If Michael Portillo's career comeback proves unstoppable, those words could well apply to Hague's political career.