Palios the first to go as Svengate thrusts FA into worst ever crisis

The Football Association was last night plunged into an unprecedented crisis following the resignation of its chief executive Mark Palios and the offer of Colin Gibson, its director of communications, to follow suit.

Palios informed the FA chairman, Geoff Thompson, of his decision at 6pm, and the resignation was accepted with immediate effect.

While Palios insists he has done nothing wrong, his position had come under increasing pressure after yesterday's News of the World claimed that the FA's director of communications Colin Gibson had offered the newspaper a full and extensive account of England coach Sven Goran Eriksson's relationship with FA secretary Faria Alam in exchange for keeping Palios ­ with whom Alam also had a relationship ­ out of the story.

Palios said last night: "I am very sad that I feel this is necessary. It has has been a privilege to be chief executive of the Football Association but with privilege comes the burden of responsibility.

"I have resigned tonight as chief executive of the Football Association. I informed the chairman of my decision at 6pm. It is important for me to take ultimate responsibility for everything the FA has done, in good times and bad.

"Personally, I do not accept I have been guilty of any wrongdoing. But it has become clear to me that my action tonight is essential to enable the FA to begin to return to normality. When I joined the FA it faced many serious challenges and a lot of very good things have been achieved in the past 13 months. I have had the privilege of working with an outstanding leadership team. For the time being, I intend to keep any further thoughts to myself."

Even by the FA's recent standards, yesterday had been a day of astonishing developments in the "Svengate" saga, the central question being whether Gibson, the FA's communications director, had offered the deal to the News of the World under instructions from Palios ­ or at least with his knowledge.

Gibson is likely to come under extreme pressure within the coming days, as is the FA's chairman, Geoff Thompson, who unilaterally cleared Palios of any wrongdoing last week.

David Davies, the FA's executive director, has been put in temporary charge of the organisation with immediate effect, with the FA due to make a formal statement on the matter today. Davies might still find himself in trouble for his role in the FA's original questioning of Eriksson over the England coach's own affair with Alam. Eriksson himself is still not in the clear over whether he lied to the FA, although concerns are easing over his immediate future.

The minister for sport Richard Caborn said the FA "need to get their act together" while continuing the good work of Palios. Caborn said the Government had a "vested interest" in seeing that the FA was well run and above reproach. "I think Mark Palios did a first-class job in restructuring the FA and dealing with the finances."

For the FA to face the prospect of losing up to five senior executives due to its bungled handling of Eriksson's affair with Alam is extraordinary. As one member of the FA's 12-man board said, before Palios's resignation last night: "I don't think any of us can quite believe how Machiavellian all this has become. Mark Palios now appears to have made a huge error of judgement. What he's done is a clear conflict of interest and he's not the only one. Several positions are looking increasingly untenable."

The 12-man board meets on Thursday to hear the findings of the FA's inquiry into how misleading denials about Eriksson's affair were originally put out. The scope of the inquiry seems to be growing by the day.

According to the News of the World, Gibson offered a full and extensive account of Eriksson's relationship with Alam in exchange for keeping Palios out of the story. "What I'm proposing is that I give you chapter and verse on her [Alam] and Sven," the paper quoted Gibson as saying in a conversation eight days ago. "And the pay-off, obviously, is that we leave MP [Palios] out of it."

Questions will be asked about Thompson's decision to exonerate Palios so swiftly of any involvement in the incorrect statements released by the FA.

Although there has been no tacit acknowledgement from any party that Palios was aware of the deal Gibson was allegedly trying to strike with the NoW, it seems unfeasible that the FA's director of communications could enter into such delicate discussions without informing senior figures at Soho Square.

"The FA knew about the details last week and the story about brokering a deal," Gibson said yesterday. "I have given complete details of the events of 24 July, including transcripts of telephone calls, my minute-to-minute movements and supplied them with a complete list of all my telephone calls."

Contacted last night, Gibson decline to comment further, saying only that he was on holiday and would not be returning until the end of the week. Thompson has so far refused to comment on the revelations, but he is certain to want urgent talks with his media spokesman ahead of Thursday.

It appears that the tables have been turned overnight with attention switching from Eriksson, who many believed was to be sacked if the FA board could prove he misled them over his relationship with Alam. Sources close to Eriksson insisted yesterday that he still wants to carry on as England coach. However they indicated that he may find it "totally untenable" unless changes are made to the FA's hierarchy. Palios apart, he is also concerned about the roles played by Gibson and Thompson.

"He is totally committed to the England squad and believes they can win the World Cup in 2006," a source close to Eriksson said. "He is trying to be dispassionate about this, but would be disappointed unless changes are made."

Eriksson will be interviewed, probably tomorrow by the lawyer carrying out the independent inquiry into the affair. He will make three points. First, that under the Human Rights Act, Article 8, the FA had no right to question him about his private life. Second, that having done that it was also in the wrong to then issue a statement without informing him it was going to do so.

Third, at no point in the conversations Davies had with Eriksson did he make it clear that he was speaking in his official capacity as the FA's executive director. Eriksson thought he was speaking to Davies as a friend and Davies is his closest friend in the FA. Davies should have prefaced the phone calls with the declaration that he was speaking in an official capacity. The issue was further complicated because Davies is Alam's boss, she is his PA, and Eriksson was concerned that she might lose her job.

"It is possible that may have caused him to dance around the issue a bit," the source said. "But he was not under the impression, at any stage, that this was an official conversation and that anything public would be issued or done because of it."

It was also confirmed that Thompson had cancelled a meeting with Eriksson's advisers last Tuesday, at short notice, and refused an offer to reschedule it later in the week. Thompson subsequently issued his own statement to launch an inquiry.