Focus: Silently, they prayed the quiet man would not quit. But only on the Labour benches

Tory MPs knew it was bad when their leader called an emergency press conference. They were resigned to his resignation. But, no, it was something far worse.

In the privacy of a ground floor room looking out upon Westminster Bridge, where the Shadow Cabinet meets every week, Iain Duncan Smith uttered one of the worst political predictions of 2002. He was summing up after a heated argument between members of his team, with John Bercow and Michael Howard as the main protagonists.

Mr Bercow, then shadow minister for work, has completely changed with the approach of middle age, away from the pro-hanging, anti-immigration, young Thatcherite he was in the 1980s. This new social liberal and champion of gay rights admits having the "zeal of a convert" and sometimes being "too intense". Many of his colleagues thought he was being a whole lot too intense on the day of the row, late last month, as he demanded the party reverse its policy of applying a three-line whip to get Tory MPs to vote against a reform which would allow unmarried couples to adopt children.

Mr Howard, the shadow Chancellor, was equally emphatic that the Conservative Party must be seen to support marriage. Others shared his view. The argument put Mr Duncan Smith in a quandary. He believes the party should encourage marriage; but he also believes that it should recognise the changing patterns of social behaviour and not cast moral judgement on how law-abiding people conduct their lives. Those two positions do not sit comfortably together.

Mr Duncan Smith eventually came down on the side of Mr Howard, on tactical grounds. He forecast that Labour would have severe problems getting the reform past the House of Lords, and that a Tory three-line whip would keep the focus "on the Government's problems, not on ours". That decision precipitated the worst crisis for Tories since they lost power five years ago. It culminated in the leader's extraordinary press conference last Tuesday, when he demanded that Tories "unite or die". By the end of the week Mr Duncan Smith felt compelled to admit to The Daily Telegraph that "we are in the biggest hole since the Conservative Party was formed."

Meanwhile, the Adoption Bill was slipping painlessly through the House of Lords. Normally, the successful passage of a difficult piece of legislation is a cause for celebration in government. Not this time. Labour whips secretly wanted the Lords to throw out the Bill, so they could bring it back to the Commons again and wreak more havoc – but shrewd Tory peers made sure it went through, to spare Mr Duncan Smith the consequences of his own folly.

The tactical misjudgement of the three-line whip had helped the Government, provoked Mr Bercow's resignation from the Shadow Cabinet, and brought big beasts like Ken Clarke and Michael Portillo out in open revolt against party policy – and that was only on day one. Having started a fire, Mr Duncan Smith seemed to decide that the next thing to do was to hose it with petrol.

The angry announcement that he was being undermined by his own colleagues was not provoked simply by one rebellion in the Commons but by what he called "an incessant process of undermining each other". His aides claim that the dramatic statement made shrewd use of his unique position as the first Tory leader directly elected by the mass of party members, and provoked "hundreds" of messages of support from activists and voters. He was apparently telling those same people, the grass roots of the party, "This involves you. I received my mandate from you, and your mandate is being undermined."

In Westminster, however, it created an air of crisis and emergency. When Conservative MPs heard that their leader was about to make a "personal statement" they gathered around their television screens in anticipation of his resignation. They heard Mr Duncan Smith talk of plots against his leadership, and deliver his warning that unwelcome consequences could follow and then – nothing. He neither resigned, nor said what he proposed to do: he simply gathered up his papers and left.

Sir George Young, one of the most seasoned Tory MPs, remarked wryly: "He seems to have forgotten to read out the second page."

Another MP described the immediate aftermath in the Commons: "I had the misfortune to be the first Tory in the tea room, and I was greeted by general derision, not for me personally but for the party. I am sick of being laughed at for being a Conservative."

As the day progressed, tempers got shorter. John Hayes, one of Mr Duncan Smith's most ardent supporters, was heard having an acrimonious exchange with a fellow Tory, Angela Browning, another loyalist. He was impressing upon her the need to back the leader. She, reportedly, objected to being lectured, having been one of those who originally signed Mr Duncan Smith's nomination papers.

The next day came the weekly ordeal of Prime Minister's Questions, an important test for any opposition leader, particularly one who needs to convince his own MPs that he is up to the job. By now, more rumours were spreading – not of another Tory plot to depose Mr Duncan Smith, but of a Labour one to keep him in office.

Labour MPs were noticeably less noisy than usual in their barracking of the Tory leader, even giving a loud ironic cheer when he first stood up. Afterwards Tories could be heard claiming that this soft treatment had been ordered. The Labour whips did not absolutely deny it. One senior whip said there was an unofficial campaign by the likes of the veteran left-wing MP Dennis Skinner, who had decided that Mr Duncan Smith was an asset for Labour and must be preserved. Another admitted: "It is true to say we're not doing anything to actively encourage our people to go for him."

Mr Duncan Smith's supporters came away from Prime Minister's Questions claiming a "score draw" – which they thought was a pretty good result, under difficult circumstances. However, the silence of some of his non-supporters suggested he had not even achieved that.

Eric Forth, the shadow Leader of the House, has not sat on the front bench during PMQs since he was seen pulling faces during Mr Duncan Smith's performance a few weeks ago. Last Wednesday he stood beside the Speaker's chair, where journalists could not see him, but Labour MPs could. They claim that as Mr Duncan Smith completed his last question, Mr Forth shook his head in despair and left the chamber. Michael Portillo, sitting at the back, followed him out.

Later that day, Tory MPs were given several homilies on the need for loyalty, during the weekly meeting of the backbench 1922 Committee. The party whips stood guard at each door throughout, to prevent journalists listening at the keyholes.

Unfortunately, the loathing that some Tories feel for one another now runs so deep that disloyalty is a habit they cannot break. One shadow cabinet member, for example, attributed the party's problems to about 20 disaffected MPs, "the wicked, the worthless and the weird".

The big question for Mr Duncan Smith this weekend is whether party activists will do as he expects and hopes, and warn their constituency MPs that they expect more loyalty. Almost every survey, including one carried out byThe Independent on Sunday, suggests that the subalterns of the Conservative Party, the constituency party officers, will always rally to their leader in a crisis, whoever he might be. But on Friday morning, these long-suffering activists will have seen the devastating headline over a Daily Telegraph poll: "Most Tories do not want Duncan Smith as leader."

This echoes the uncomfortable experience of Jacqui Lait, MP for Beckenham, who had loyally warned her colleagues that they risked the anger of their own members if they persisted in plotting. Her argument fell apart when her own constituency party chairman, Rod Reed, forecast on television that Mr Duncan Smith could be out of office "within weeks".

Not many people think he will be out that quickly. The former Scots Guard is expected to soldier on through the five weeks between the Queen's Speech and the Christmas recess. After that, according to one shrewd Tory MP: "We are in uncharted waters."

The crisis is not purely about whether Mr Duncan Smith is a competent leader. It dates back to 1990, when the party rid itself of Margaret Thatcher, but never made the decision about whether to continue as Thatcherite or reinvent itself as something more akin to a European Christian democratic party.

Baroness Thatcher emerged last week like a mummy from its tomb to declare that the Conservative Party – by which she means a Thatcherite party – will live for ever, but that Mr Duncan Smith was mortal. She was right on the second count.