A media storm erupted around Cherie Blair today following reports that she accused Gordon Brown of lying when he used his party conference speech to heap effusive praise on her husband.

The Prime Minister's wife reportedly left the conference centre in Manchester this afternoon saying, "Well, that's a lie", just as the Chancellor was saying that it had been a "privilege for me to work for" Mr Blair, the Bloomberg news agency reported.

Mrs Blair tonight denied the report by Bloomberg. "Honestly, guys, I hate to spoil your story, but I didn’t say it and I don’t believe it either," she told reporters.

In earlier reports Bloomberg said that Mrs Blair had left the auditorium rather than the conference centre. No 10 insisted that this invalidated the entire piece.

"Bloomberg first claimed Mrs Blair stormed out of the hall and flashed that story on their screens.

"When the story was totally denied on Mrs Blair’s behalf and it was pointed out that she had not at any time been in the hall, Bloomberg conveniently changed their story.

"The fact is that no version of this story is true and Bloomberg should withdraw it immediately."

The spokeswoman added: "Mrs Blair was accompanied by four people, two of whom were protection officers, none of whom heard her say anything."

But Bloomberg said later that it would not retract the story.

In the agency's report, it says that Mrs Blair was walking through a display area outside the auditorium when she spotted Mr Brown on television monitors, praising Mr Blair's strengths and achievements.

It is then that the Bloomberg journalist Carolin Lotter, who was standing about 6ft away, overheard Mrs Blair comment: "Well, that's a lie".

A spokeswoman for the company said: "We stand by our reporting. The story speaks for itself."

Carolin Lotter told Channel 4 News tonight: "She was walking past one of the screens when I heard her say 'well that's a lie'."

A Downing Street spokesman later told Times Online that Mrs Blair had been in the exhibition hall when she realised that Mr Brown's speech had begun so she decided to watch it on television instead of going into the auditorium.

In spite of No 10's denials, the report will fuel speculation about the current state of relations between the two men.

Over the last decade their relationship has been blighted by rows over claims that Mr Blair promised that he would hand over power to Mr Brown.

Their difficulties intensified after Mr Blair said he would stand down as Prime Minister and Labour leader at the end of the current Parliamentary term.

After a turbulent summer in which the Chancellor was accused by Mr Blair's supporters, including Charles Clarke, the former Home Secretary, of plotting to undermine his leadership both men have been trying to call for unity and stability.

Mr Blair, who makes his keynote speech to the party conference tomorrow, said yesterday that he would prefer to concentrate on the public's concerns rather than in-fighting.

However, he refused to confirm or deny reports that he was not going to endorse Mr Brown as his successor, nor would he say whether he still thought that the chancellor would make a brilliant Prime Minister.

Mr Brown's speech this afternoon began with fuIsome praise for Mr Blair's achievements. He said: "I’ve worked with Tony Blair for almost ten years as Chancellor - the longest relationship of any Prime Minister and Chancellor in history.

"And it has been a privilege for me to work with and for the most successful ever Labour leader and Labour Prime Minister."

He did, though, acknowledge that theirs had been a troubled relationship.

".....it’s hardly surprising that as in any relationship there have been times when we’ve differed. And where over these years differences have distracted from what matters I regret that, as I know Tony does too."

Mr Brown is seen by many in the Labour Party as the natural successor to Mr Blair but several heavyweight contenders including Alan Johnson, John Reid, Peter Hain and John Hutton are now being touted as possible challengers for the leadership.

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