A key passage in the Government's Iraq weapons dossier was changed following an 11th hour intervention by one of Tony Blair's closest aides, the Hutton inquiry was told today.

The inquiry heard that Jonathan Powell, the No 10 chief of staff, warned on the eve of publication that the dossier's wording suggested that Saddam Hussein would only use chemical and biological weapons (CBW) if he was actually attacked.

In an e-mail to John Scarlett, the chairman of the Joint Intelligence Committee, he said that the passage was "a bit of a problem" as it could play into the hands of critics of military action. He urged him to re-write it.

Giving evidence to the inquiry, Mr Scarlett acknowledged that Mr Powell's intervention had "prompted" him to look again at the intelligence and to re-draft the passage concerned.

But he insisted throughout his appearance that he had retained control of the production of the dossier and that there had been no improper political interference.

The inquiry is investigating how David Kelly, a Government weapons expert, apparently came to take his own life after being identified as the source of a BBC report claiming that No 10 had "sexed up" the dossier, against the wishes of the intelligence agencies, to strengthen the case for war.

Mr Powell wrote in an e-mail: "I think the statement on pg 19 that 'Saddam is prepared to use chemical and biological weapons if he believes is regime is under threat' is a bit of a problem.

"It backs up the Don McIntyre (Independent political columnist) argument that there is no CBW threat and we will only create one if we attack him. I think you should redraft the para."

In the final version of the dossier the passage was changed to read: "Saddam is willing to use chemical and biological weapons, including against his own Shia population."

Mr Scarlett said that he looked again at the passage and realised there was no JIC assessment on whether the threat from Saddam's CBW was defensive or offensive.

At the same time, recent intelligence reporting had emphasised that Saddam's "attachment" to chemical and biological weapons was very much linked to his perception of Iraq's power in the region.

"The recent intelligence was more complex than that phrase implied. We concluded that this was not right the way it was phrased. I took that out," he said. "I was exercising my judgment as I was authorised to do."

Earlier, the inquiry heard that the first suggestion to toughen-up the 45-minute claim in the Government's Iraqi weapons dossier came from intelligence staff, not Alastair Campbell, the head of communications at No 10.

Mr Scarlett said that inconsistencies in the claim's wording in different parts of the document were raised by officials within the Defence Intelligence Staff.

The September 16 draft's executive summary contained a "judgment" that chemical and biological weapons "could be ready for use within 45 minutes", he said. The main text said that they "may" have had that capability.

"This was clearly an inconsistency which was unbalanced and needed to be addressed," he told the inquiry.

Members of the Defence Intelligence Staff raised the question in advance of a drafting meeting on September 17, he said, before a memo from Alastair Campbell was received outlining 16 points where he said that the language needed to be clarified.

Mr Scarlett said that the issue was discussed at the drafting meeting and the language "tightened" to be "brought into line with the intelligence."

The JIC chairman was also asked about a memo of a meeting he chaired on September 18 which stated that "ownership lay with No 10". Mr Scarlett, who has always claimed to the Hutton inquiry that ownership of the document lay with him, said that the memo referred to the Government department which would present the document to parliament.

He said: "Since this document was going to be presented by the Prime Minister to Parliament, its ownership, in that sense, lay with No10."

Earlier, the Downing Street official who called David Kelly a "Walter Mitty character" denied that the comment was part of a strategy to discredit the scientist.

Tom Kelly, one of the Prime Minister's official spokesmen, insisted that his remarks to a journalist were not part of a campaign to posthumously "belittle, demean or slur" Dr Kelly.

Mr Kelly, also appearing at the Hutton inquiry, again apologised for the remark.

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