The former secretary of state for social security was said to have failed to give a convincing reply when he was challenged over whether he would have stayed in John Major's Cabinet if it had backed Britain's entry into a single currency.
Michael Howard, the former home secretary, gained points at the meeting of right-wing Tory MPs for saying he would have resigned, according to his camp. "Peter Lilley refused to say clearly where he stood on the single currency. It was very silly because they asked a simple question - would you have stayed in the Cabinet if it had been in favour of entry to a single currency - Michael Howard surprised them all by saying `no'," said a Howard supporter.
The in-fighting among the right-wing candidates deepened as Kenneth Clarke pulled off the second coup of the week by winning the support of Sir George Young, the former transport secretary. It came as a blow to the Hague camp, who had been hoping to land Sir George, in spite of his reputation as a patrician Tory baronet.
"The key question is who is most likely to lead us to victory in five years. We need someone voters can relate to and identify with, who can communicate clearly with them and can land punches on Labour ... Ken has the extra qualities that make him an outstanding candidate," said Sir George.
Stephen Dorrell, who last week dropped out in favour of Mr Clarke, will be appearing on the media this weekend for the former Chancellor, who has avoided a high profile for the first round.
The struggle for an advantage on the right of the party underlines the closeness of the contest to be high in the first ballot next Tuesday. Mr Clarke is expected to come first, but the fight is on for second and third. The candidates who come fourth and fifth will be under pressure to drop out.
The Howard camp is claiming that the former home secretary has survived the attack on him by his former minister, Ann Widdecombe, and is gaining support, challenging William Hague for second place after Mr Clarke, with Mr Lilley and Mr Redwood trailing.
John Redwood's demand that the Shadow Cabinet should implacably oppose a single currency is seen as the price for his support in the final rounds, and an attempt to force Mr Howard, if he wins, to adopt a tougher policy. Mr Redwood's policy would make it impossible for Mr Clarke to serve in his Shadow Cabinet. But Mr Howard ispreparing a compromise to enable Mr Clarke to stay on board.
"Michael is opposed to a single currency in principle but in the long run, that is a policy around which the Conservative Party can unite," said one Howard supporter. "It leaves room for Ken who says he is opposed to a single currency being fudged. Michael's view is that it will always be fudged."Reuse content