Tory chairman accused of running dirty tricks campaign while minister

Cabinet Office refuses to hand over documents relating to altered letter from Lord O'Donnell

The Conservative Party chairman Grant Shapps pictured posing as his alter-ego, Michael Green

Grant Shapps has been accused of being at the centre of a "cover-up" over attempts to smear Lord Prescott, after the Cabinet Office refused to release key correspondence from the Tory chairman's former department.

While he was housing minister, Mr Shapps repeatedly accused Lord Prescott of having a "cavalier attitude to the public purse", releasing details of bills run up on the former Labour deputy prime minister's departmental credit card.

But a letter sent last year by Lord O'Donnell, the then head of the Civil Service, clearing Lord Prescott was substantially altered after contact from Mr Shapps' Department for Communities and Local Government.

The Cabinet Office has now blocked Lord Prescott's attempts to get hold of exchanges that led to the alterations, ruling that publication is "not in the public interest".

A month before he resigned as Cabinet Secretary, Lord O'Donnell reviewed the row and wrote to Lord Prescott telling him "the expenditure appears to have been legitimate".

However Lord O'Donnell's letter, sent initially on 18 November, was subsequently altered and resent four days later. Claims in the initial letter that "money has been recovered and an individual disciplined", as well as an apology that Lord Prescott was not notified in advance by Mr Shapps of his allegations, were omitted.

Lord Prescott told The Independent yesterday that he believed the second letter was sent without the knowledge of Lord O'Donnell, after representations from officials in Mr Shapps' former department.

"This is a remarkable government cover-up. Altering letters from the most powerful civil servant in the land without his permission or knowledge is a very, very serious offence," he said. It was an "astounding judgement", he said, that "uncovering who was responsible for this was not in the public interest".

Lord Prescott is demanding that the Information Commissioner, Christopher Graham, intervenes and forces the Cabinet Office to publish its correspondence with DCLG officials. Aides to Mr Shapps insist they did not contact the Cabinet Office to request that the O'Donnell letter be altered.

The publicity generated by Mr Shapps' accusations, many made under the protection of parliamentary privilege, have damaged Lord Prescott's attempt to win November's election for Humberside's police and crime commissioner.

Among the "evidence of excess" were transactions for restaurant bills in Australia, Ireland, Malaysia, the United States and Canada. However, a fraudulently cloned government credit card accounted for £2000 of the bills. In October, Lord Prescott told the Cabinet Office he had never owned a government credit card and accused Mr Shapps of deliberately peddling false accusations as part of an orchestrated "dirty tricks" campaign.

The accusations are the latest problem facing Mr Shapps, who was promoted to Tory co-chairman in the autumn reshuffle but has faced questions about his business interests.

He has also admitted that he used pseudonyms including "Michael Green" and "Sebastian Fox" in the operation of an online "how to" internet company that he started before he became an MP and which is now run by his wife Belinda.

Following accusations by the Labour MP Steve McCabe that the Tory Party was being run by someone with "multiple personalities and questionable business practices", Mr Shapps told Sky News yesterday that he was not living a "double life" and that like many authors he simply "wrote under a business name".

He said he had stopped using the alter-egos "a long time ago".