The acting chief of Scotland Yard faces a public grilling over the Damian Green affair when he appears before the London Assembly today. The question and answer session was supposed to be a routine monthly appearance but is certain to be dominated by questions about the arrest of the Conservative frontbencher.

Sir Paul Stephenson will appear alongside Boris Johnson, the Mayor of London, with whom he has had an angry and widely publicised falling-out over the detention of Mr Green.

The Yard embarked on a belated damage limitation exercise yesterday, setting up an urgent review into its handling of the case. Sir Paul said he was “properly concerned” at the issues raised by the MP’s arrest and has asked a senior officer from an outside force to carry out the review. Detectives working on the inquiry into systematic leaks from the Home Office will also have further consultations with prosecution lawyers.

Sir Paul said that Ian Johnston, Chief Constable of British Transport Police, would examine “our decisions, actions and handling of the investigation” and provide an interim report within a week. He said a full report would be ready in a fortnight. Mr Johnston is a former senior Met officer who took over at the transport force in 2001.

The review is seen as the beginning of the Yard’s “exit strategy” to extricate itself from one of the worst scandals it has endured. The Times understands that senior figures in the Police Service have been urging Sir Paul to drop the leak inquiry and find a face-saving way out of the debacle. One said: “It’s a massive cockup, almost incomprehensible.”

Another added: “This is not about state secrets: it’s about politically embarrassing information. Why are we involved at all?”

The dropping of the case may not, however, revive Sir Paul’s chances, nor those of Bob Quick, Assistant Commissioner for Special Operations, in the race to become the Met’s next commissioner.

Sources have suggested that if Mr Johnston’s report is critical or recommends the dropping of the inquiry, Sir Paul and Mr Quick – who ordered the arrest of Mr Green – could withdraw their candidacies.

The Mayor, who is also chairman of the Metropolitan Police Authority and will have a significant say in the appointment of the next Met commissioner, said the move was sensible. He added: “It is right that someone independent should look closely at how the police conducted this investigation and whether the actions and decisions they took were proportionate and necessary and I am pleased at the commonsense approach this represents.”

Jacqui Smith, the Home Secretary, welcomed Mr Johnston’s review and said she had sought assurances from Scotland Yard about the conduct of its investigation. She said: “In view of the gravity and sensitivity of this ongoing investigation, I spoke to Sir Paul to seek his assurance that the investigation was being pursued diligently, sensitively and in a proportionate manner.”

The Home Secretary reiterated her support for the “operational independence” of the police, who she said “should be free to pursue their investigations without fear or favour”.

Dominic Grieve, the Shadow Home Secretary, said the case review was “the first sensible step that has happened in this sorry saga”.

Video footage of the moment police raided Mr Green’s parliamentary office was released yesterday. Counter-terrorism officers from Scotland Yard are shown rifling through Mr Green’s Commons files in the footage, which was shot by Mr Green’s Tory party colleagues and released on David Cameron’s personal website. Mr Cameron’s principal political adviser, Andrew Mackay, can also be seen, confronting the officers. The release of the footage was delayed by almost two hours as police insisted that their faces were blurred out.

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