The BBC's top executive quit yesterday after a British judge condemned it for wrongly accusing Tony Blair over the Iraq war, but cries of "whitewash" rained down on the prime minister's victory parade.

Blair and the BBC called a truce after the venerable broadcaster apologised "unreservedly" over the Iraq episode, which led to the suicide of a British expert on Iraq's weapons.

"This for me has always been a very simple matter of an accusation that was a very serious one that was made. It has now been withdrawn, that is all I ever wanted," Blair said in response to the BBC's apology.

"It allows us to draw a line and move on." On Wednesday, Judge Lord Hutton exonerated the prime minister of wrong doing over the death of government scientist David Kelly and ruled that the BBC's claim that Blair had "sexed up" intelligence on Iraq was unfounded.

In response, BBC Chairman Gavyn Davies quit on Wednesday and Director General Greg Dyke followed him yesterday in what is being called the gravest crisis in the BBC's 82-year history.

As Dyke resigned, the BBC bowed to the government's demands for a full apology over the Iraq affair, which has marked the most perilous period of Blair's six-year premiership.

"I hope that a line can now be drawn under this whole episode," Dyke told reporters outside the BBC's head office.

Crowds of BBC employees protested outside BBC Television Centre in London over Hutton's verdict and Dyke's departure.

Blair's foes, many commentators and large parts of the public were staggered at the scale of the prime minister's let-off by Hutton compared with the censure of the BBC.

In an NOP poll for London's Evening Standard newspaper, 56 per cent said it was unfair the BBC had received most of the blame and 49 per cent branded Hutton's report a whitewash.

Kelly killed himself in July after being named as the source behind the BBC's claim that the government had hyped the threat from Iraq. His death sparked a war between the government and the BBC and plunged Blair into the darkest days of his tenure.

Hutton's report had the potential to sink Blair had he been directly blamed for naming Kelly as the BBC's source. Instead, Hutton slammed the BBC's management procedures as "defective".

Davies, in his resignation letter, questioned Hutton's conclusions while the nation's press had a field day.

One newspaper splashed a picture of a grinning Blair on its front page with a halo over him and the headline "Saint Tony".

Another left its front page largely blank save for the question "Whitewash?" in red letters.

Hutton's report came a day after Blair had narrowly averted parliamentary defeat on a key bill, seeing him through a two-day period that had threatened his political future.

The prime minister had been staring at a humiliating defeat in Tuesday's vote on education reform. He scraped through, his majority of 161 slashed to just five votes.

After the vote, Labour party legislators warned Blair against stretching their loyalty to such limits again. But Blair yesterday promised no let-up in reforms many in Labour oppose.

"There are lessons to be learned, bridges to be built but no wavering in our political purpose," Blair said in a speech on public services as he sought to close off the Kelly affair that has seen his public trust ratings tumble.

But he is not out of the wood yet on Iraq. Hutton said the intellgence published on Iraq's weapons of mass destruction - the primary reason Blair gave for war - had been consistent with what was known at the time.

But Blair's critics were quick to return to the question of the whereabouts of those weapons, which have yet to be found.

In the Evening Standard poll, 70 per cent called for a full independent inquiry into the reason Britain went to war.

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