More embarrassment for Bush as hero of Watergate enters row over 'outed' agent

Patrick Fitzgerald, the no-nonsense special prosecutor who has been making life miserable for the Bush administration for months, announced on Friday that the investigation was not only continuing but warranted the impanelling of a second grand jury. The first grand jury, whose term expired at the end of October, fingered Vice-President Dick Cheney's Chief of Staff, I Lewis "Scooter" Libby, on five counts of obstruction of justice and lying to investigators.

Until last week, the most vulnerable member of the administration appeared to be Karl Rove, President Bush's most valued political adviser, who has acknowledged being one of the officials who discussed the CIA agent Valerie Plame with reporters shortly before her identity was made public.

Now, however, the case has taken on an explosive new aspect following the revelation that Bob Woodward, the veteran Washington Post reporter and hero of Watergate, had been told about Ms Plame before any other journalist but kept the information to himself - even after the scandal broke and every news junkie in Washington was hungering after every last detail.

Mr Woodward himself does not appear to be in legal trouble, although he has taken a considerable hit to his journalistic reputation, but his source may well be. To judge by the text of Mr Libby's indictment and Mr Woodward's public statements in the past few days, it appears the source did not initially tell Mr Fitzgerald about his conversations with Mr Woodward in June 2003 but hurried back to the special prosecutor about two weeks ago, after Mr Woodward "reminded" him about them. The journalist then testified to Mr Fitzgerald himself last Monday.

Washington now has a new guessing game on its hands, which is to figure out who the source might be and what kind of political damage he or she represents to the floundering Bush administration. The naming of Ms Plame appears to have been an act of low political revenge against her diplomat husband, Joseph Wilson, who went public in the summer of 2003 to say he had investigated claims that Saddam Hussein had purchased yellowcake uranium from Africa, and found them to be bogus.

Her exposure may not be as politically significant, however, as what the case reveals about the half-truths and deceptions the Bush administration employed to cajole a frightened nation into supporting the military campaign to unseat Saddam.

Despite insisting for weeks that it will not comment on an ongoing criminal investigation, the White House was quick to issue a statement last week listing people it said were not Mr Woodward's source. These included the President himself, White House Chief of Staff Andy Card, former secretary of state Colin Powell and former CIA chief George Tenet.

The leading suspect, meanwhile, appears to be Stephen Hadley, currently the President's National Security Adviser, who pointedly failed to issue a clear denial when asked if he was Mr Woodward's source. Pressed during a presidential trip to South Korea whether his convoluted initial answer meant yes or no, he replied: "It is what it is."