The central question of how MPs should clean up their act in future was meanwhile plunged into deeper confusion as Labour protests over the secret Committee of Privileges 'questions for cash' investigation were overtaken by Opposition calls for a far broader and fully independent inquiry.
A split opened up between Tory backbenchers over whether Mr Hamilton, the corporate affairs minister, should fight his legal case against the Guardian from the back benches, with some clearly dismayed at the potential embarrassment for the Prime Minister if there was not at least a temporary stand- down. Mr Hamilton's position was 'untenable', one MP said.
Last night's regular meeting of the 1922 committee of Tory backbenchers broke up within 15 minutes as MPs shrank from discussing the issue. One senior executive member said: 'We are very unhappy that it being construed as a matter for the Government, when all this happened when none of the MPs concerned were in government.'
David Hunt, Chancellor of the Duchy of Lancaster, was the Cabinet minister in charge of the Government's defence. He repeatedly defended the decision by Tories on the privileges committee to hold their inquiry - which may now be extended to cover the former minister Tim Smith - in private.
He likewise rejected the view that John Major should have requested Mr Hamilton to stand aside. 'It is a rule in the UK that you are innocent until proven guilty,' he said.
Doug Hoyle, chairman of the Parliamentary Labour Party and one of the MPs who have withdrawn from the privileges committee, insisted that its investigation must now include both Mr Hamilton and Mr Smith.
Both MPs got constituency backing yesterday. Kevin Hourigan, who chairs Mr Smith's Beaconsfield, Buckinghamshire, association said it was 'a great shame that something which happened seven years ago should result in all this'.
A third area of argument revolved around what new rules of conduct are needed for the future, with some MPs arguing that all extra-parliamentary earnings should be outlawed but others insisting that a line banning payments for questions and paid- for consultancies could easily be drawn.
Underlying that is the key matter highlighted by John Major in Prime Minister's Questions exchanges: while failing to declare a financial interest in the MPs' Register of Interests is clearly wrong, little else short of criminal corruption is.
The fact that less than 10 per cent of MPs have nothing to declare proves the point. The basic premise that MPs are free to do anything that has not been specifically ruled out is now thoroughly discredited in the view of a growing number of members.
Such is the depth of 'sleaze' that some MPs have even tired of using it as a party political weapon - they just want something done.
However, the format for deciding on change is generating almost equivalent dissent.
Labour whips have made a preliminary approach to their government counterparts in the wake of the walk-out by Labour MPs from the privileges committee.
Labour members were adamant yesterday that a compromise position of a presumption of openness subject to exceptions, for example for legal reasons, would be the minimum they could accept. The indications are, however, that the Government will press on without them.
Tony Benn, MP for Chesterfield and a Privy Councillor, said yesterday that the committee will now have 'no credibility whatsoever'.
Tony Blair, the Labour leader, John Prescott, his deputy, and Alex Carlile, a senior Liberal Democrat, all pressed yesterday for a fully independent inquiry or commission.
Dale Campbell-Savours, Labour MP for Workington and a specialist in constitutional affairs, suggested a Speaker's Commission, under which the Commons Speaker, Betty Boothroyd, could select a range of members from within the Commons and Lords, along with figures from other walks of life outside, from industrialists to specialists in ethics.
John Biffen, a former Tory Leader of the Commons, said that if the work of the privileges committee was going to be hampered by 'trench warfare of the most partisan kind', a committee from outside the Commons should be created to monitor MPs' conduct.
The row puts the prospect of agreement on a new set of ethics far down the track. But Robin Cook, shadow Foreign Secretary, was quite clear about where the line should be drawn. 'I don't think there should be any doubt. Members of Parliament are paid a salary. It's not a bad salary. That is the way they are remunerated for doing the job. They certainly should not be taking money for doing particular aspects of the job.'
We would like to make clear that the Mr Morris quoted in yesterday's article, 'Labour MPs walk out of questions inquiry', was Alf Morris, MP for Wythenshawe.
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