The enforced resignations of Mr Peter Mandelson and Mr Geoffrey Robinson left the British Prime Minister, Mr Tony Blair, badly shaken last night at the end of his worst day since coming to power. The Trade and Industry Secretary and the Postmaster General were forced from office amid fresh charges of "cronyism" and "sleaze" - and new and searching questions about the secret £373,000 sterling loan from Mr Robinson and the £150,000 Britannia mortgage with which Mr Mandelson purchased his luxury home in West London's fashionable Notting Hill.
After a long night of reflection, Mr Mandelson - architect of New Labour, and the Prime Minister's closest confidant - dropped his political bombshell on Westminster just before 12.30 p.m. The fate of the already beleaguered Mr Robinson was announced by Downing Street three hours later.
Both men continued to maintain they had not broken the ministerial code of conduct. Mr Robinson, a millionaire, insisted the loan was to a friend, and he expected nothing in return. But Mr Mandelson, acknowledging with hindsight that he should have informed his Permanent Secretary of his financial relationship with Mr Robinson, said he was going to prevent further damage to the government's credibility.
Red-eyed and clearly emotional, Mr Mandelson, just 62 days in the cabinet, said: "We have worked all these years to create New Labour, to demonstrate that the standards of government and of behaviour in public life were going to be restored permanently. "In my action I allowed the impression to be created that we had fallen below those high standards. I had to do something radical to restore people's faith in this government."
As his carefully plotted political career crashed around him, Mr Mandelson opened his resignation letter to Mr Blair with the words, "I can scarcely believe I am writing this letter to you . . . " The prime minister told him: "It is no exaggeration to say that without your support and advice we would never have built New Labour." It was typical, said Mr Blair, that when they spoke on Tuesday night - when Mr Mandelson first offered his resignation - "your thought was for the reputation of the government".
Clearly devastated by the loss of his friend and ally, Mr Blair held out the prospect of his eventual return to the cabinet. "I also want you to know that you have my profound thanks for all you have done and my belief that, in the future, you will achieve much, much more with us," he told him.
But even as the cabinet "enforcer", Dr Jack Cunningham, declared the issue "behind us", questions were continuing about Mr Mandelson's mortgage application and whether he had divulged to Britannia Building Society the existence of the Robinson loan. Asked on BBC television if he could give the assurance that he had completed the mortgage application with "complete propriety" Mr Mandelson again said "it was nearly two years ago", that he could not remember the details, and given all else that had been on his plate in the preceding 24 hours, he could not "clarify that even now".
PA adds: The Deputy Prime Minister, Mr John Prescott, clashed angrily with an interviewer who suggested that "something nasty was bubbling beneath" Peter Mandelson's resignation.
He vehemently denied that a key aide of the Chancellor, Mr Gordon Brown, "dished the dirt" on Mr Mandelson as part of a running feud within the Cabinet.
"The press live on that kind of speculation. And I don't know, unless you've got more definite evidence, how to comment on your allegations," he told Jon Snow on Channel 4 News.