Blair sucked into vicious feud between spin doctors

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Tony Blair sought to cool a rapidly escalating civil war in Whitehall last night as Downing Street's credibility was called into a question for the second day running.

A long-running feud between Jo Moore, the spin doctor who said 11 September would be a good day to bury bad news, and civil servants at the Department of Transport, Local Government and the Regions (DTLR) erupted spectacularly, leaving the Government in chaos.

On Wednesday, Downing Street changed its version of events over Mr Blair's support for the bid by Lakshmi Mittal, a Labour donor, to buy a Romanian steel plant. Yesterday, it was forced into a humiliating climbdown after trying to rubbish newspaper reports alleging that Ms Moore had suggested that damaging statistics about the rail industry be issued today so they would go unnoticed amid coverage of Princess Margaret's funeral.

Ms Moore denied the reports, while her friends claimed she was a target of "dirty tricks" by civil servants determined to force her out of her job. The matter provoked fresh criticism of Stephen Byers, the Secretary of State for Transport, who refused to sack his special adviser after her infamous 11 September e-mail.

After speaking yesterday morning to Mr Byers and Martin Sixsmith, the Department of Transport's civil service director of communications, Mr Blair's official spokesman told journalists that an e-mail allegedly sent to Ms Moore by Mr Sixsmith was "a fabrication".

But anonymous sources in the DTLR disclosed later that the stories were fundamentally correct. In the afternoon, Mr Blair's spokesman admitted that an e-mail was sent by Mr Sixsmith to Mr Byers saying it would be wrong to issue the statistics today. It is believed this was copied to Ms Moore.

In an attempt to avoid charges that it had lied, Downing Street turned its fire on the DTLR. Mr Blair's spokesman said: "There's clearly a game going on here ... I'm not prepared to have my integrity and my credibility put on the line, because I believe they are commodities which are precious.

"There are people within the department who will hide behind anonymity and do everything possible to undermine Jo Moore and, in doing so, their own department and the Secretary of State ... That strikes me as pretty unacceptable."

Number 10 refused to name the suspected culprits. But Mike Granatt, head of the Government Information and Communication Service, wrote to Mr Sixsmith "in the strongest terms" to demand an end to the feuding. Mr Granatt said that if anybody in Mr Sixsmith's department had a grievance against Ms Moore, they should air it through proper channels rather than through the press. Although Downing Street insisted that Ms Moore and Mr Sixsmith would keep their jobs, there was speculation in Whitehall that one or both would be forced out by the fracas.

To add to the Government's embarrassment, Robin Cook, the Leader of the Commons, was caught up in the argument because he told MPs that the e-mail quoted in newspaper reports was a "fabrication". Last night he issued a statement blaming the DTLR.

The Whitehall war capped a disastrous week for the Government, which has been forced on to the defensive by the disclosures over Mr Blair's intervention on behalf of Mr Mittal. The Prime Minister told yesterday's Cabinet meeting that the allegations were "nonsense" but ministers acknowledged that the Government had been blown off course.

Last night the Tories attacked the "extraordinary shambles" and claimed the latest controversy over Ms Moore was an attempt to divert attention from the Mittal affair.

Tim Collins, the shadow Cabinet Office Minister, said: "For at least the sixth time this week, Downing Street has changed its story completely. This morning Downing Street briefers played the Jo Moore story right down, belittling it. Now they have deliberately played it up, painting the picture of a Department of Transport crippled in the cross-fire of a vicious gang war."