After a three-hour meeting between the player and senior officials, the Rugby Football Union (RFU) announced that the player had denied the "principal allegations" made against him by a tabloid newspaper. These were that he and other players had celebrated a victorious Test series in South Africa by taking cocaine and ecstasy and that as a teenager he had sold drugs.
Brian Baister, chairman of the RFU, said: "Lawrence Dallaglio frankly answered all the questions put to him by representatives of the RFU and categorically denied the principal allegations."
The decision represents something of a compromise.While the RFU clearly agreed his position was currently untenable - replacing him as captain until after this year's Rugby World Cup with Martin Johnson - it appears officials have given at least some degree of credibility to his apparently staunch denials.
In particular the England coach, Clive Woodward, the man who promoted Mr Dallaglio to the position of captain two years ago, said he believed the player to be innocent.
"Personally - based on what he has told me privately and also what he told everybody here this morning, I believe he is innocent of the accusations that have been put at him," he said. "He is devastated. He is shocked. We are all shocked."
Mr Dallaglio, 26, did not attend the press conference last night at the RFU headquarters in Twickenham. He is due to make his own announcement later today.
In a statement last night, he categorically denied "ever having dealt in illegal drugs" and "ever having used illegal drugs". Dallaglio added that "the circumstances in which the supposed admissions were obtained amounted to an elaborate set-up.
"Pandering to the whims of these people, I appreciate that I made an error in judgment, which stems from naivety and foolishness," Dallaglio's statement went on.
The player went on to apologise for "any embarrassment or distress that this episode has caused to my family, my colleagues at all levels of the game, the RFU and all supporters of rugby union".Reuse content