Levy accused of bullying Blair aide

His meeting with the Prime Minister's 'gatekeeper', Ruth Turner, last summer left her in tears and triggered a police investigation into a possible cover-up.

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The dramatic twist, following 72 hours of legal activity, intensified speculation that charges are imminent. Pressure on the Government mounted as Attorney General Lord Goldsmith suspended an injunction that had stopped the BBC reporting details of a potentially-explosive document concerning Lord Levy and Miss Turner.

Newspaper reports said the man known as Lord Cashpoint had urged her to 'shape' the evidence she gave to Scotland Yard.

Miss Turner, 36, Downing Street's head of government relations who played a key role in awarding political honours, was left shaken and angry.

She wrote a detailed account of the conversation and her concerns about the developing police inquiry in a memo that stretched to several pages.

The revelation of the document sparked bitter claim and counter-claim from rival camps at the heart of the government.

It put the spotlight back on Lord Levy, who has been arrested twice in the yearlong investigation of a secretive scheme for funding Labour's 2005 election campaign. There was a furious denial from his lawyer, who claimed he was the victim of a smear campaign.

But the news also fuelled speculation that Mr Blair's supporters have tried to pin the blame on Lord Levy and draw attention away from persistent questions about the roles played by Miss Turner, chief of staff Jonathan Powell and Mr Blair himself.

Amid reports that the police are close to sending a dossier to the Crown Prosecution Service, Westminster sources said it will soon be known which of the major players will have the last laugh. Officers are said to believe they have enough evidence for charges, including perverting the course of justice.

The meeting between Miss Turner and Lord Levy was said to be about his account of how a list of names to be recommended for peerages was drawn up. It was still unclear last night whether it took place before or after his first arrest last July.

The memo she wrote details her 'worries' about the version of events presented by Lord Levy, and her belief that the issue was so serious Mr Blair should be told about it, according to a BBC report last night.

It was this note which prompted the police to begin probing a possible cover-up.

Miss Turner later passed the note to her lawyers and it is now in the hands of the police, who went to the High Court at the weekend to stop the BBC reporting its contents.

But the Guardian published details yesterday after seeing off an attempt by the Attorney General and the police to secure a separate injunction on Monday night.

With the attempts to gag the media in ruins, the Attorney General suspended the injunction against the BBC. Scotland

Yard expressed its dismay at the continued media coverage of its investigation but acknowledged: 'It is no longer tenable or appropriate for us to seek to maintain any of the existing undertakings or injunctions.'

Some sources warned last night that Miss Turner's account was one- sided and may not accurately reflect the full exchange between the two key Blair advisers.

There is also suspicion at Westminster over the way selective contents of her memo have been allowed to leak.

Fingers were pointed at Downing Street amid fears that the story is part of a calculated attempt to set up Lord Levy as a fall-guy in an affair that has dogged Mr Blair's final year in office and threatens to taint even further a legacy already overshadowed by the Iraq war.

Lord Levy's lawyer said: 'Lord Levy categorically denies any wrong-doing whatsoever.

'The current round of articles in the media, which are said to be based on leaked material under consideration by the police, are partial, contradictory, confused and inaccurate.

'There has been a regular stream of leaks which have presented a prejudiced and distorted view. Cumulatively, these leaks and reports have created a climate which does not allow for any fair assessment of the investigation.'

The statement said Lord Levy was under an 'intolerable burden' but could not defend himself while the police investigation continued.