Dame Sue Street, 56, Whitehall’s most senior female civil servant, announced that she was leaving her £130,000 job running the Department for Culture, Media and Sport (DCMS) to pursue “other options”, including further work in the public sector.

Last night Dame Sue took the unusual step of releasing a public statement to say it was “categorically untrue” that she had quit because of rows with the Culture Secretary.

Last month an investigation by Sir Gus O’Donnell, the head of the Civil Service, concluded that if Ms Jowell had known about the payment to her husband she should have told Dame Sue. Italian prosecutors say that the alleged £350,000 “gift” comes from Silvio Berlusconi, the Italian Prime Minister, but this is denied by Ms Jowell’s estranged husband, David Mills. The Culture Secretary said that she was unaware of the gift, and was subsequently cleared by Tony Blair.

Dame Sue has run the department since 2001, during controversies over gambling and licensing reforms. She also oversaw the campaign to bring the 2012 Olympics to London.

She was appointed Commander of the Order of the Bath in the Queen’s Birthday Honours last year.

For the Conservatives, Hugo Swire, the Shadow Culture Secretary, said: “The decision to try to bury this bad news late on Friday shows the nervousness in the DCMS. This is just the lastest proof of the chaos and disarray in Tessa Jowell’s department. Criticism of licensing, confusion over gambling, delays over Wembley, let alone the problems caused by Miss Jowell’s personal position, all point to the chaos enveloping her department.

“With her top civil servant jumping ship, it raises questions over the ability of Tessa Jowell’s department to remain focused on delivering the Olympics in 2012. With such a major project involving billions of pounds of taxpayers’ money, we cannot have the department responsible in such a shambles.”

However, Dame Sue said last night: “The claims of clashes with Tessa Jowell are categorically untrue. After more than four years at DCMS I decided that it was time for me to move on and pursue other options. I will retire from the department in September.”

The Cabinet Office said: “We are appalled by the suggestion that Sue Street left for any reason other than her desire to pursue other goals. There was no suggestion to Sir Gus O’Donnell that her retirement was anything other than that she has completed her four years, the standard tenure for permanent secretaries.”

One source said that discussions about her future began before Christmas, well before the row over Ms Jowell’s husband erupted.

In a few months, the permanent secretaries at the Department of Health, the Home Office, the Department for Work and Pensions, and the Ministry of Defence have all changed. Dame Sue’s departure leaves Whitehall with one female Permanent Secretary, the newly appointed Helen Ghosh at the Department for Environment, Farming and Rural Affairs.

Don Foster, the Liberal Democrat Culture spokesman, said that the Culture Department played a pivotal role in Whitehall so it was important its senior personnel get on well: “Few people understand the scope or reach of this department, from the lottery to licensing, sport, tourism and museums. There are huge battles with other departments. It’s important it functions effectively.”

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