Alastair Campbell reignited the row between the BBC and the Government just as it had begun to disappear from the headlines, the corporation's chairman said yesterday.
Gavyn Davies told the Hutton inquiry that the dispute over Andrew Gilligan's claim that ministers "sexed up" the Government's dossier on Iraq's weapons of mass destruction had started to disappear from view when the Prime Minister's director of communications launched an "extraordinary attack" on the BBC during evidence to MPs.
But he acknowledged that there were lessons to be learnt from the affair. He said: "On behalf of the whole BBC, I would like to put on record our enormous regret at the death of Dr Kelly. The BBC has the deepest sympathy for Dr Kelly's family and all of us at the BBC are profoundly sorry about the tragic events of the last two months and we will do out utmost to learn important lessons for the future."
Questioned by James Dingemans QC, counsel for the inquiry, Mr Davies accused Mr Campbell of a "major escalation" of the dispute when he appeared before the Foreign Affairs Select Committee on 25 June.
Mr Davies said he initially regarded the row as "largely routine". It had moved off the front pages and at the meeting of BBC governors on 18 June no member of the board had raised the row over Mr Gilligan's report.
But that changed dramatically after Mr Campbell's appearance before MPs, Davies told the inquiry. He said: "I really do believe it became of great gravity after Alastair Campbell's Foreign Affairs Committee evidence on June 25.
"I felt this was an extraordinary moment. Almost unprecedented. An unprecedented attack on the BBC to be mounted by the head of communications at Downing Street."
He said Mr Campbell had accused the BBC of lying and claimed the corporation had accused the Prime Minister of lying, something Mr Davies insisted the corporation had never done.
He added: "He accused the BBC of following an anti-war agenda during and after the Iraq conflict. I took this as an attack on the integrity of the BBC and the impartiality of the BBC."
Despite lengthy questioning by Lord Hutton, Mr Davies insisted that there was a distinction between the BBC making allegations, and it reporting the views of a source.
He said: "I believe that if the BBC reports that the BBC believes something, the requirement for certainty is much greater on behalf of the broadcasters. If the BBC reports that a credible and reliable source reports something, it is something that is thought to be a valid remark to be put in the public domain but it is clearly hinged on one person's view."
Mr Davies told the inquiry that Mr Gilligan had been wrong to send members of the Foreign Affairs Committee an e-mail revealing that Dr Kelly had been the source for a second BBC story, by the Newsnight journalist Susan Watts. He said he regretted anything that might have added to the pressures on Dr Kelly.
Mr Gilligan, who gave evidence to the inquiry two weeks ago, has submitted a second witness statement to the inquiry to explain the e-mails. They were not submitted by Mr Gilligan but became known to the inquiry last week.
Mr Davies acknowledged some criticisms of Mr Gilligan's two reports on the Today programme, which sparked the dispute. He said there was an "issue" about whether such reports should be unscripted, and said the corporation's governors had already warned that the Today programme should have given the Government earlier warning of Mr Gilligan's report.
Mr Davies insisted it would have been impossible for the BBC's governors to check the veracity of Mr Gilligan's story, but had checked that the Today programme's editor had properly reassured himself about the nature of the reporter's source.
However, he said the statement issued by the governors after an emergency meeting on 7 June deliberately made it plain that the BBC was not attacking the Prime Minister's integrity.