Hunt comforted adviser, then said: 'Everyone thinks you've got to go'

Adam Smith reveals how he was lined up as the fall guy over BSkyB bid controversy

Jeremy Hunt told his adviser Adam Smith that his job was safe when they went for a drink – and then hours later urged him to quit, telling him: "Everyone here thinks you have to go."

Mr Smith had offered his resignation to the Culture Secretary on the day that damaging email evidence published by the Leveson Inquiry threatened Mr Hunt's job in the Cabinet. It emerged that Mr Smith had exchanged hundreds of messages with a senior News Corporation lobbyist while the Government was scrutinising the company's £8bn takeover deal for BSkyB.

Mr Hunt reassured his aide though that he had only been "doing his job" and "it won't come to that".

That promise evaporated overnight, however. Mr Smith told the inquiry that when he arrived for work the next morning Mr Hunt had already been in a series of meetings. A call from his boss then informed him: "Everyone thinks you need to go."

Mr Smith's future was decided far above Mr Hunt. The Cabinet Office drafted the resignation letter and included the phrase that he "believed" his role was to be close to News Corp. Only after noisy objection was this changed.

Returning to the judicial inquiry yesterday for a second day, Mr Smith gave evidence which suggested he was being carefully lined up as the fall guy for the department's continuing embarrassment. He said that officials at the Department for Culture, Media and Sport initially told him to make contact with the News Corp lobbyist Fred Michel. He told the inquiry he was "certain" his department knew he was directly communicating with the Murdoch organisation during the key stages of their bid for control of all of BSkyB. "It couldn't have been a surprise to anyone," he said.

However he qualified this saying they may not have appreciated the high volume of exchanges. He said he felt "bombarded" by the emails and texts he received from Mr Michel which arrived early morning, late evening and throughout weekends.

Although aware Mr Michel was after insider government intelligence on the BSkyB bid, Mr Smith said no one at the department expressed concern or offered legal guidance.

Details from a huge cache of documents, showed Mr Michel regularly emailed James Murdoch giving him information and updated views on the bid from "JH".

The inquiry heard how texts and lengthy telephone calls by Mr Michel to Mr Smith often preceded the information Mr Michel then passed up the News Corp chain to Mr Murdoch.

One email suggested Mr Hunt was, "keen to get the same outcome as News Corp." Mr Smith said he wouldn't have used those words.

When News Corp eventually offered concessions, referred to as "undertaking in lieu", on new rules for the governance of Sky News which would avoid further regulatory examinations, Mr Michel claimed he was told it was "game over" for opponents of the bid.

Again, Mr Smith claimed the lobbyist was exaggerating but conceded their conversation may have been "along those lines".

Hesitant and at times contradictory answers to questioning from the inquiry's counsel, Robert Jay QC, did not help Mr Smith's cause.