The offer, unprecedented for a minister appointed to a middle ranking portfolio, is the most remarkable evidence yet of Mr Major's eagerness to keep the former Chancellor within the Government when he decided to sack him from the Treasury.
It also suggests that Mr Major may have been worried, rightly as it turns out, that Mr Lamont would not go quietly. Downing Street, however, was unprepared for Mr Lamont's resignation speech last Wednesday, which attacked government 'short-termism' and threw Mr Major back on the defensive again.
As well as retaining Dorneywood, the 45-room Queen Anne mansion in Buckinghamshire, Mr Lamont would have had a handsome official flat as a consolation for losing No 11, the Chancellor's official residence. Mr Lamont and his wife, Rosemary, were known to be attached to Dorneywood, which is set in 214 acres of garden and woodland. They used it frequently for weekend entertaining.
The offer was firmly rejected by Mr Lamont. It gives the lie, however, to suggestions by some MPs that the Prime Minister expected Mr Lamont to refuse the environment post and only invited him to take it for form's sake. According to accounts filtering out of Whitehall, Mr Major three times urged Mr Lamont to accept the post in their tense 15-minute meeting last month.
Mr Lamont warned Downing Street last week, through ministers acting as intermediaries, that he could speak out again if provoked. No 10 has since subtly distanced itself from the attack by Sir Norman Fowler, the Tory party chairman, on Mr Lamont for making a 'nasty' speech. In the Commons, Mr Major went out of his way to indicate that he respected Mr Lamont's strongly held views - revealed in the resignation statement - in favour of an independent central bank.
Dorneywood was at the heart of a bitter controversy four years ago when Margaret Thatcher was forced to take it off Nigel Lawson, then Chancellor. Sir Geoffrey Howe was sacked as Foreign Secretary and made deputy Prime Minister and leader of the Commons. He was given Dorneywood as part of the deal.
The publicity given to the wrangle was said by some MPs to have lost Sir Geoffrey the last hope of becoming party leader.
Dorneywood, which has 14 reception rooms, many decorated with Whistler murals, was given to the state by the businessman Courtauld Thomson in the 1950s.
Mr Lamont - who is moving back into his west London home - has told fellow MPs that he intends to pursue a full-time political career on the back benches. But he will write what could be a controversial book on his Chancellorship. Mr Lamont, said to be relaxed and cheerful, has told colleagues that his mailbag is showing heavy support for his resignation speech.
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