His position became increasingly untenable. So Gilligan had to go

When Andrew Gilligan started reading Lord Hutton's report at 12.38 on Tuesday afternoon, he had flickering hopes that whatever criticism he faced would not be fatal to his BBC career.

Soon, as he turned page after damning page, the full magnitude of the ferocious condemnation became clear. It was, he said a feeling of incredulity that the judgment was so biased, mixed with a sense of deep desolation.

His departure last night was inevitable. In a whirlwind 48 hours, Gavyn Davies, the chairman of the board of governors, and Greg Dyke, the director general had gone, the staff were in turmoil, while an exultant Downing Street demanded a humiliating surrender.

Yesterday, as Mr Gilligan made his journey from his home in south-east London to the BBC offices in Bush House, he knew it was only a matter of time before he had to go. If he stayed, he told friends, he would be known for ever within the BBC as " the man who cost Davies and Dyke their jobs".

Although Mr Gilligan says he had been guaranteed by the management that he would not be sacked, it had also become clear he would not be returning to his post of defence and diplomatic correspondent of Radio 4's Today programme.

Endless attempts by Mr Gilligan to arrange a meeting with Kevin Marsh, the Today editor, are said to have failed to elicit a response. The Hutton inquiry had already heard that Mr Marsh had written a memorandum accusing the journalist of "loose use of language".

Surveying the devastation around him, Mr Gilligan saw a future spent in the BBC version of Siberia. Just after 6pm yesterday he announced his resignation.

There was a practical and lucrative aspect to the timing as well. Freeing himself from the BBC will allow Mr Gilligan to write an article for a tabloid newspaper tomorrow for a five-figure sum. He has already prepared a "treatment" for a book of his experience - for an expectant sum said to be between £100,000 and £250,000 - and there is said to be the offer of a job as a roving feature writer for a broadsheet newspaper.

So Mr Gilligan left the "BBC I love" with a salvo at the "grave injustice" that had been Lord Hutton's report. He once again admitted his mistake in the now infamous 6.07am broadcast in which he said the Government "probably knew" that Saddam's so-called 45 minutes threat was wrong, but protested about the imposition "on the BBC a punishment far out of proportion to its, or my mistakes, which were honest ones".

So, it was the end to a short and tempestuous BBC career for the journalist who was brought into Today by its then editor, Rod Liddle, from The Sunday Telegraph to bring in a cutting edge. The feeling was, Richard Sambrook, the head of news, told the Hutton inquiry, that some of the occupants of the BBC defence correspondent's post had been little more than Ministry of Defence press officers. Mr Gilligan's style of reporting earned him hostility, not just within the Government, but also among some of his fellow BBC journalists.

Mr Gilligan's trouble with the Government began in 1999, soon after he joined the BBC, with a report suggesting that attempts to codify the various EU treaties amounted to a constitution for a European superstate. No 10 attempted to dismiss him as "gullible Gilligan". His irritant quotient rose.

Mr Gilligan's reports from Baghdad especially irked No 10, and "gullible Gilligan" became "Saddam's stooge". But, with widespread scepticism in the media over Tony Blair's justification for the invasion, this appeared to do the journalist no harm. Each time one of his reports led to a fierce denial from Downing Street, went the joke among journalists in Baghdad, his salary went up by £5,000.

So it was an ebullient Mr Gilligan who had returned from Baghdad to bask in the congratulations of his superiors, including Mr Marsh.

It was a heady time. The invasion of Iraq had been a military success, but a ferocious resistance was surfacing. The predominant topic for journalists in Mr Gilligan's field were Saddam Hussein's alleged weapons of mass destruction - the justification used by George Bush and Tony Blair for the war.

It was with this in mind that Mr Gilligan went to meet David Kelly in central London on 22 May. It was at the Charing Cross Hotel in the Strand, a place used by defence correspondent's for official meetings with senior figures from the MoD.

The meeting was hardly unusual. The scientist was used to seeing the media. Indeed, his telephone numbers were routinely passed on by the MoD and the Foreign Office for journalists, British and foreign, who wanted information on chemical and biological weapons. There was no perceived problem from the Government point of view - on the matter of Iraq's WMD, Dr Kelly was a hawk.

As Mr Gilligan sipped a coke, and Dr Kelly drank a bottle of Appletise, the scientist stopped singing from the official hymn sheet. There was unhappiness within the intelligence community, Mr Gilligan claims he said, because the Government was attempting to embellish the dossier, including putting in the 45-minute claim. The person responsible, the scientist allegedly said, was Alastair Campbell, the Prime Minister's director of communications.

Mr Gilligan waited a week before broadcasting the allegations. He followed up with an article in The Mail on Sunday, for which he was a regular contributor, naming Mr Campbell for the first time. No one was to know at the time the storm that would be unleashed. Indeed, Mr Gilligan told friends at the time of his disappointment that not one single Fleet Street newspaper had followed it up.

The Government did not mention the story in three letters of almost routine complaints about the war coverage to the BBC. But then the Foreign Affairs Committee announced that it was going to investigate the Government's case for war.

For Mr Campbell, any focus on the second "dodgy" dossier, in September, which he and his team had partly plagiarised, would have been highly embarrassing. He suddenly turned his fury on Mr Gilligan's "45-minute" report, which was in the first dossier, published in September, passed, unlike the second one, by the Joint Intelligence Committee. The plan worked, media attention was now on the battle with the BBC, as was the FAC's. The "dodgy dossier" was forgotten. Letters flew between No 10 and the BBC, with the corporation's management, exasperated by what they saw as incessant bullying from Mr Campbell.

The affair was about to die away, both sides wearily preparing to accept the stand-off, when Dr Kelly came forward to tell of his meeting. The Government saw a chance to use the scientist to discredit Mr Gilligan. Dr Kelly, pushed into a corner, failed to tell the full extent of his conversation to either his superiors at the MoD, the FAC or the Intelligence and Security Committee, which was carrying out another inquiry.

On 18 July, Dr Kelly's body was found, and the Hutton inquiry was ordered. Even though Mr Gilligan had a bruising time while giving evidence, he was optimistic he would not be the only person blamed; he hoped the Government would receive its share. In the final days before publication Mr Gilligan was quite bullish and even attacked his bête noir, Alastair Campbell. But then came Lord Hutton's report and for the journalist there was no way back.

'Report casts a chill over all journalism'

The following is an edited version of Andrew Gilligan's resignation statement

I am today resigning from the BBC. I and everyone else involved have admitted the mistakes we made. We deserved criticism. Some of my story was wrong, as I admitted at the inquiry, and I again apologise. But the BBC has been the victim of a grave injustice.

If Lord Hutton had fairly considered the evidence, he would have concluded that most of my story was right. The Government did sex-up the dossier, transforming probabilities into certainties, removing vital caveats; the 45-minute claim was the 'classic example' of this; and many in the intelligence services, including the leading expert in WMD, were unhappy about it. Thanks to what David Kelly told me and other BBC journalists, we know what we did not know before.

This report casts a chill over all journalism. It seeks to hold reporters to a standard that it does not appear to demand of, for instance, government dossiers. I am comforted by the fact that public opinion appears to disagree with Lord Hutton and I hope this will strengthen the resolve of the BBC.

The report has imposed on the BBC a punishment far out of proportion to its or my mistakes, which were honest ones. It is hard to believe that this all stems from two flawed sentences in one unscripted early-morning interview when I said that the Government "probably knew" that the 45-minute figure was wrong.

I attributed this to David Kelly; it was in fact an inference of mine. It has been claimed that this was the charge which went round the world, but a cuttings check shows that it did not even get as far as a single Fleet Street newspaper. Nor did the Government mention it in its first three letters of complaint.

In my view, this helps explain why neither I nor the BBC focused on this phrase. I made clear, in my broadcasts, that the 45-minute point was based on real intelligence. I repeatedly said that I did not accuse the Government of fabrication, but of exaggeration. In Greg Dyke the BBC has lost its finest director general for a generation. He should not have resigned, and I am sorry to see him go.

I would like to thank the BBC for its support throughout this terrible ordeal. It has defended the right to report accurately on matters about which the public has a right to know. Save for the admissions I and the BBC have made, my reporting on the dossier's compilation fulfilled this purpose.

I love the BBC and I am resigning because I want to protect it. I accept my part in the crisis which has befallen the organisation. But a greater part has been played by the unbalanced judgments of Lord Hutton.