Mr Redwood had called on the City Corporation not to bestow the freedom on Chancellor Kohl because it would be honouring European economic and monetary union (Emu) as well.
Accusing the Government and the City of making a mistake in honouring the German leader, the Conservative's leading Euro-sceptic said in a party news release: "Many British people have no personal dislike of Chancellor Kohl but are strongly against monetary union. As monetary union is Chancellor Kohl's crusade, the City's indecision over Emu has been overwhelmed by their endorsement of its architect."
But last night Mr Redwood was slapped down by Mr Hague and ordered to withdraw the press release. Red-faced Tory officials pointed out that Michael Howard, the shadow Foreign Secretary, was attending the ceremony at the Guildhall in honour of Chancellor Kohl.
"John Redwood has withdrawn the press release. Chancellor Kohl is being given the honour for the reunification of Germany without bloodshed."
Margaret Beckett, the President of the Board of Trade, said: "Following our intervention, William Hague has recognised that John Redwood is out of control and needs to be brought to heel."
Downing Street had earlier denied claims that it had "leant" on the City Corporation to bestow the honour on Chancellor Kohl.
The German Chancellor's arrival at the Guildhall was greeted by a small demonstration of Euro-sceptics protesting at the threat to the pound posed by his plans for Emu.
The Prime Minister's official spokesman dismissed the claims by Mr Redwood, accusing him of being "one of the more serious victims of Opposition politics".
No 10 said that it had been consulted by the corporation on the decision to present the honour to Chancellor Kohl.