The day Blair wanted to hose down his furious adviser

One of Alastair Campbell's private comments about life inside Tony Blair's inner circle was: "People resent us because they think we're powerful. I can tell you we don't feel powerful - being kicked about by the newspapers every day."

That was said on a rare day when the BBC and its reporter Andrew Gilligan were not the first targets of Mr Campbell's displeasure. Similar fulminations were heard coming from his office, yet more loudly and insistently, in the weeks preceding the death of David Kelly.

In this he had the apparent backing of Tony Blair, who told the Hutton inquiry last week that it was when Mr Campbell was included by name in the sweep of Mr Gilligan's allegations against the Government that his reportage ceased to be a "small item". The personal fingering of Downing Street's director of communications put "booster rockets" on the entire controversy.

But there was also a hint last week that as the affair dragged on, Mr Blair would have liked to hose down his furious adviser and call it quits.

"I was of the view that the only thing that would really help in this situation was that there was something clear and unequivocal stated by the BBC that the story was wrong," the Prime Minister said. "I did not think it terribly likely that we were going to get such a statement by that stage and also, to be blunt about it, I thought we had to move on."

But there was to be no "moving on". In the very week when Tony Blair was thinking along these lines, Mr Campbell insisted on making his highly publicised appearance before the Commons Foreign Affairs Committee, after reading in The Independent on Sunday that if he did not appear in person, the committee's findings were likely to back the BBC.

Later in the same week, the Prime Minister had a telephone call from his aide, who was now angrier than ever with the BBC and wanting to go on Channel 4 News to press his case. Mr Blair decided that the row was attracting so much publicity that an unscheduled television appearance would not make much difference.

Mr Campbell's opponents would scoff at the idea that he might be the wronged party in a quarrel, but he was utterly convinced throughout that this was so. He considered that he was going about his daily business, doing a high-profile job as best he could, when out of the woodwork came a pernicious BBC journalist, described in the Campbell diaries as "ghastly Gilligan", accusing him, by name, of doctoring intelligence reports to manufacture a case for going to war in Iraq.

It irritated him that, as he battled with unyielding BBC executives to defend himself against what he saw as an unprovoked personal attack, he had to endure photographers and television cameras at his front door in the early mornings and at weekends, while his children played inside - while Mr Gilligan seemed to suffer no consequences whatever.

At a personal level, Mr Campbell may now get some satisfaction. The latest batch of documents released by the Hutton inquiry reveals yet another case of Mr Gilligan surreptitiously tipping off an MP that David Kelly had been speaking to a fellow BBC journalist, at a time when he claimed publicly that he was trying to protect his source from exposure. These emails to members of the Foreign Affairs Committee, three of which have now belatedly come to light, have thrown a large question mark over Mr Gilligan's future as a BBC correspondent.

Mr Campbell, meanwhile, will not be short of money or projects to occupy his time, even if he decides to withhold his diaries from publication temporarily, out of respect for Tony Blair. When they appear, they will make him a rich man.

His departure will be a personal wrench for the Prime Minister, but may be advantageous to the Government. The voluminous evidence presented to Lord Hutton has presented a none-too-flattering picture of the way Whitehall is run, with political advisers and leading senior civil servants pulled into long, obsessive debates on how this or that government action will be received by the media.

The Defence Secretary, Geoff Hoon, escaped one trap in his appearance at the inquiry on Wednesday, only to fall into another. He had been cast beforehand as the fall guy who was going to be blamed for putting Dr Kelly under intolerable pressure by allowing his name to leak out. Instead, he presented a portrait of himself as someone almost peripheral to the decision-making process, fortifying suspicions that Cabinet government in Britain is a dead letter. It seems, from Mr Hoon's account, that officials and advisers dealt with this sensitive problem, keeping the Defence Secretary informed as a courtesy, although he is nominally in charge of the department for which Dr Kelly was working.

The departure of the most senior and most famous of the spin-doctors will now be used as the occasion to address this negative image of a Government run by shadowy advisers. David Hill, Mr Campbell's nominal successor, will be a less influential and less controversial figure. Instead of having the power to instruct civil servants, as Mr Campbell still has, he will have to report to a civil servant. One of the main tasks of this new chief spin-doctor will be to try to get the expression "spin-doctor" to disappear from public discourse for as long as possible.

Mr Hill's arrival will also be a small victory for what the ultra-Blairites see as Old Labour. Ironically, he would almost certainly have had the job years ago, if the former Labour leader John Smith had survived to win an election. Mr Smith might have offered Alastair Campbell a life peerage, but never a job in Downing Street.

Mr Hill was never trusted by Tony Blair or Neil Kinnock to the extent that he was by John Smith, and never worked in either of their private offices. When he applied to succeed Peter Mandelson as the Labour Party's director of communications in 1990, he was turned down.

Despite his reputation as a man who likes journalists and is more polite to journalists than Mr Campbell, it was actually an intemperate attack on an eminent member of the profession that helped him to recover his political position after that setback.

Interviewed for the post of communications director when it fell vacant again in 1991, Mr Hill was asked by one member of the interviewing panel for his opinion of a column written by none other than Alan Watkins, now of The Independent on Sunday, who had penned some uncomplimentary words about the state of the Labour Party.

With uncharacteristic bile, Mr Hill snapped that "Alan Watkins is an absolute idiot". With this, he heard the familiar Welsh voice of Neil Kinnock muttering: "He's just got the job." Mr Hill had at last found a way to earn the trust of what is now known as New Labour.