President Bush's closest political adviser appeared before a federal grand jury today as prosecutors decided whether to bring charges against him over the leaking of the name of a CIA agent to reporters.

Karl Rove, the chief architect of Mr Bush's re-election last year, has been warned that there is no guarantee that he will not be indicted before the grand jury's term expires on October 28.

Today's appearance - his fourth, but his first since new evidence was heard from one of the journalists at the heart of the case - was probably his final chance to persuade the grand jurors that he did nothing illegal.

The questions surrounding Mr Rove are damaging for Mr Bush, whose popularity has declined over his handling of Hurricane Katrina and the war in Iraq. The grand jury is investigating allegations that both Mr Rove and Lewis Libby, Vice-President Dick Cheney's chief of staff, leaked the name of Valerie Plame, a covert CIA operative, to the New York Times.

Ms Plame's diplomat husband, Joseph Wilson, says that Bush administration officials leaked her name to discredit him, after he criticised the President's Iraq policy in a New York Times op-ed piece on July 6, 2003.

The White House has shifted from categorical denials two years ago that either Mr Rove or Mr Libby were involved in the leak, to a "no comment" today. Since then, reporters have named both men as their sources for reports.

Judith Miller, the New York Times reporter jailed for 85 days for refusing to name her source before reaching an agreement to do so, testified twice before the grand jury about conversations with Mr Libby. Matt Cooper, a reporter for Time magazine, testified that Mr Rove was the first person to tell him that Mr Wilson's wife worked at "the agency" - although he did not actually name her.

Scott McClellan, the White House press secretary, today rejected suggestions that the investigation was distracting the White House. "We’re aware of all those things," he said. "But we’ve got a lot of work to do and that’s where we’re focused."

Special Counsel Patrick Fitzgerald walked into the grand jury area with Mr Rove this morning. The spotlight in Mr Fitzgerald’s investigation recently has fallen on Mr Libby, who was the focus of prosecutors’ questions in two grand jury appearances by Ms Miller.

Mr Fitzgerald has a variety of options, as he weighs whether anyone broke a law that bars the intentional unmasking of a covert CIA officer. Defence lawyers are now concerned that Mr Fitzgerald might pursue other charges as well, such as false statements, obstruction of justice, or mishandling of classified information.

He might also decide that no crime was committed and issue a report along those lines.

An experienced prosecutor with a Republican pedigree, Mr Fitzgerald has a reputation for being willing to take on politicians of either political party in corruption probes. Currently, his office is prosecuting a former Republican governor of Illinois.

Pressure is mounting on the White House to deny that, with its credibility on the line, the Bush administration may indeed have tried to deal with a political problem by briefing reporters privately.

But Scott McClellan, the White House press secretary, today rejected suggestions that the investigation was distracting the adminstration. "We’re aware of all those things," he said. "But we’ve got a lot of work to do and that’s where we’re focused."

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