'Downing St dirty tricks behind outing of Kelly'

Cabinet ministers loyal to Ms Kelly were furious at what they perceived as yet another example of a No 10 drive to take oxygen away from potential challengers to Gordon Brown.

The leaking of the Transport Secretary's decision to step down from the Government emerged just before dawn after a frenzied, rumour-filled few hours in Manchester.

"This is a declaration of war. Downing Street must be stopped," one minister said as the news electrified the conference hotel bars and restaurants.

The key fear of ministers is that Ms Kelly's "outing" follows a pattern that appeared to begin nearly two weeks ago, when names were leaked of a clutch of rebel MPs who had written to ask about the nomination process for a leadership challenge.

Government whip Siobhain McDonagh decided to appear on TV after it was revealed she was one of those involved in the letter. She, along with Cyprus envoy and fellow Blairite Joan Ryan, was forced to quit.

Yet Ms McDonagh always insisted she had written in confidence to Chief Whip Geoff Hoon and to Labour general secretary Ray Collins, and had never intended for her letter to be made public.

Mr Hoon denied on the record that he had been behind the leak of Ms McDonagh's name. But suspicions were widespread among dissident MPs that they were now "marked" men and women.

After Frank Field and Graham Stringer were similarly outed, they complained that Mr Brown's allies were seeking to kill off a potential challenge by using threats of public exposure and the resultant loss of Government jobs.

Scotland minister David Cairns was next to be identified, after he was suspected of being behind the Evening Standard's exclusive that a minister of state was set to quit after the conference in protest at Mr Brown's poor leadership.

The story triggered a witch-hunt in Whitehall, as every minister of the same rank was contacted and asked if they were set to jump ship. Amid the fevered atmosphere, several ministers who were out of London and out of contact became objects of suspicion instantly. Europe minister Jim Murphy, who was abroad, was chased by frantic civil servants asking him to check in with No 10.

Environment minister Phil Woolas was perhaps the unluckiest suspect, as he was attending climate change talks up a remote mountain in Argentina. Hundreds of miles from civilisation, his office got the message: "Urgent - ring London - political, not family."

Mr Woolas was out of mobile range and was so worried he got his civil servant to grab a satphone from a mountain rescue base. He then reassured No10 he was not quitting.

Even so, when he got off the mountain he found he had 27 missed calls from friends, family and journalists wondering if he had resigned. After Mr Cairns was named in the media, he was eventually tracked down, and following an "emotional" session with Scotland Secretary Des Browne he decided to announce he was quitting.

One member of the Cabinet told the Standard: "This is exactly the kind of thing that we have always loathed about the Brown people. The way they treated David Cairns - one of the most decent men you'll meet in politics - was disgusting."

In recent days the conference has been plagued by ministers receiving phone calls from people purporting to be journalists, only for them to return the call to find there was no such request.

Suspicions that the leaking of Ms Kelly's departure was a Downing Street operation were heightened last night when BBC's Newsnight cited "No 10 sources" for a report claiming the Transport Secretary was to be sacked.

Downing Street denies strongly that it proactively released her name. But at about 1.30am, as activists and ministers partied into the morning, Sky News revealed Ms Kelly was set to resign.

Again, No 10 claims the Newsnight story simply prompted calls from other journalists, and that it couldn't deny she had already agreed with Mr Brown she would step down in the next reshuffle.

In one of the most bizarre events ever seen at a conference, political journalists gathered in the hotel foyer at 3.30am for a briefing by No 10 political staff and Ms Kelly's aide. Even though all the press journalists had missed their final edition deadlines, they were informed formally that Ms Kelly would indeed quit. The Press Association decided to put the story out at 4.08am.

Blairites are convinced Downing Street believed, wrongly, that Ms Kelly was part of a wider plot to quit with two or three other ministers and force Mr Brown out. But they are baffled as to why Mr Brown's allies would want to overshadow his media appearances this morning by leaking the news.

Most tellingly, perhaps, Ms Kelly herself said she was "shocked" that news she had kept under wraps since May had been made public.

Amid fears that David Miliband is next in line for a similar "operation", ministers are set to demand a shake-up of the Downing Street machine.