Senior Cabinet ministers warned Virginia Bottomley not to sack Peter Davis, the National Lottery regulator, over accepting free flights from a company involved in running the lottery.
Mrs Bottomley announced her decision to back him last night and one reason for Government support was believed to be to avoid giving in to media pressure for his resignation. It would also have been seen as a blot on the lottery's success.
The Secretary of State for National Heritage avoided an embarrassing Commons statement, but issued a statement after a meeting with Mr Davis. She said there was never any doubt about his integrity, although she had warned him it was unwise to take the free flights in America from GTECH, a stake-holder in Camelot, the lottery organiser.
Mrs Bottomley said he had assured her there were "no other issues" which might come to light later that might affect her decision. But she told him to maintain "a proper distance from the company and its constituent parts" in future.
Her vote of confidence was challenged by opposition leaders last night. Robert Maclennan, the Liberal Democrat heritage spokesman, said: "Mr Davis is not fit to regulate a million-pound business if he cannot regulate his own behaviour."
News of Mr Davis's reprieve came as fresh revelations raised further questions about the regulation of the lottery. He refused to insert a clause in Camelot's licence giving him the ability to cap its earnings.
When the company's licence was drawn up last year, it was based on predictions of sales of pounds 3bn. In fact, Camelot is forecasting sales of around pounds 5bn.
At the time, Mr Davis rejected including a clause allowing the percentage taken by the company to be revised downwards if the lottery did better than expected. In an interview broadcast on BBC TV's Newsnight last month, Mr Davis admitted dropping the idea: "Had we offered them a licence, the financial terms of which could have been changed at the whim of the regulator, then frankly we wouldn't have had any reputable companies applying for the licence."
An Oflot spokeswoman said yesterday it was true sales had exceeded expectations but there was no prospect of revising Camelot's contract. The terms of the licence, she said, would stand until the licence expired in 2001.
Meanwhile 25 MPs continued to put Camelot under the spotlight by signing an early day motion condemning plans by the operator to sell lists of its winners to junk mail firms. Under the Data Protection Act, holders of computerised personal details must declare what they plan to do with the data. Camelot has registered under the category "trading in personal information".
This does not relate to the company's databases for shopkeepers who carry its terminals or its personnel records, which are covered by separate entries.
The motion tabled by Mr Maclennan, condemns the possible sale as "a potential infringement upon the privacy of winners", and says it "will cause a great deal of distress to those who wish to withhold their identity from the public domain".
Ian Young, of Manches, a firm of London solicitors with a large data protection practice, said Camelot had "showed they could sell information if they felt so minded. It does not mean they can do it now but one day they may want to".
A Camelot spokeswoman said trading in personal information not only covers selling lists "but also incidental information collected for other purposes." Camelot, she said, had no intention of selling the names of prize-winners.Reuse content