THE BBC's credibility was questioned last night after Dr David Kelly was confirmed as the prime source for reports that intelligence on Iraq was "sexed up".

Defence official Dr Kelly committed suicide at a beauty spot three days after telling MPs he had not made the accusation.

His death presented Tony Blair with the gravest crisis of his career in the middle of a marathon diplomatic tour.

Dr Kelly sent an e-mail about "many dark actors playing games"only hours before taking painkillers and slitting his wrist.

The Prime Minister and his media chief, Alastair Campbell, faced calls to quit amid claims Dr Kelly was hounded to death to clear their names.

But the BBC admission cast fresh doubt on the report which sparked the furious battle with Downing Street.

BBC Radio 4 Today programme journalist Andrew Gilligan later insisted: "I did not misquote or misrepresent Dr David Kelly."

However, his statement left questions about the report unanswered. Dr Kelly's local Tory MP, Robert Jackson, said chairman Gavyn Davies should go and director general Greg Dyke "should consider his position".

And Mr Jackson accused Mr Gilligan of inventing much of his controversial Iraq dossier story.

Mr Blair, Mr Campbell and Defence Secretary Geoff Hoon still face serious questions over how Dr Kelly's name leaked out.

That will be a key aspect of the independent judicial inquiry being carried out by Lord Hutton.

Mr Blair's readiness to set up the inquiry sparked fresh calls for a broader tribunal examining the Government's case for war.

However Mr Campbell, in particular, appears vindicated for the way he set about clearing his name.

He had been accused of inserting a claim that Saddam Hussein could deploy weapons of mass destruction in 45 minutes into a dossier on Iraq against the wishes of intelligence chiefs.

Mr Gilligan said the allegation came from a senior official closely involved in the preparation of the dossier.

His bosses never said the claim was true, only that under the circumstances it was right to make it public.

In yesterday's statement the BBC said: "The BBC believes we accurately interpreted and reported the factual information obtained by us during interviews with Dr Kelly."

Mr Gilligan pointed out a similar report from a colleague based on a separate briefing by the defence official went unchallenged by Downing Street.

However, Dr Kelly told MPs investigating the claims they could not have come from the briefing he gave Mr Gilligan.

"I believe I am not the main source," he told the Foreign Affairs Committee on Tuesday. "From the conversation I had I don't see how he could make the authoritative statement he was making from the comments I made."

The MPs called Mr Gilligan an "unsatisfactory witness" who had changed his story when he appeared before them for a second time.

The journalist is said to have admitted his claims were based on "inference".

Committee chairman Donald Anderson said yesterday there was a "fundamental conflict" between the evidence it received from Dr Kelly and Mr Gilligan.

Senior Labour backbencher Gerald Kaufman said the affair called into question the BBC's future as a public sector broadcaster.

Mr Kaufman said the BBC had behaved in a manner which a tabloid newspaper might "wonder about".