Downing Street has ended its war with the BBC over the David Kelly affair today after Greg Dyke, its Director General, quit and its acting chairman apologised "unreservedly".

Tony Blair welcomed the apology and said the Government could now "draw a line" under the whole episode.

Alastair Campbell, his former communications director and the most tenacious critic of the BBC, also said he now accepted the affair was over telling Five News:

"I’m sad that it’s taken all this to get a situation where these allegations have finally been withdrawn."

Lord Ryder’s apology, delivered on TV as the corporation’s acting Chairman, was the final act of compliance from the corporation the Government had been waiting for since Lord Hutton yesterday published his report into Dr Kelly’s death.

It found Mr Gilligan’s Today programme claims that No 10 had "sexed up" its dossier on Iraq’s weapons of mass destruction were "unfounded" and cleared ministers from Mr Blair down of any impropriety concerning events leading up to weapons expert Dr Kelly’s suicide.

He had been the source of Mr Gilligan’s broadcast.

Greg Dyke resigned this afternoon as BBC Director General, joining ex-chairman Gavyn Davies in quitting the corporation in the wake of the Hutton report, which was scathing in its criticism of the corporation’s editorial and management systems.

Mr Blair’s official spokesman said: "They decided to resign and the Prime Minister believes that two decent and honourable men have done the decent and honourable thing and it is time, as he said, to move on."

Mr Dyke announced he was resigning in an attempt to "draw a line under this episode".

He added: "Throughout this affair my sole aim as director general of the BBC has been to defend our editorial independence and to act in the public interest."

It emerged later that he was reluctant to go, hoping that his tendered resignation would be rejected.

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