Did this minister tell a lie to MPs?

STEPHEN BYERS was plunged deeper into crisis last night by dramatic new allegations that he misled MPs. Rail Regulator Tom Winsor accused the Transport Secretary of threatening to strip him of his powers if he tried to bail out Railtrack.

The allegation flies in the face of Byers's own categoric assurance to MPs on Monday that he issued no threat. Coming in the wake of the Railtrack shutdown fiasco and the uproar over his adviser Jo Moore's callous e-mail on 11 September, it could prove a fatal blow. Tories accused the Minister of being a 'serial offender' at misleading the Commons and demanded his immediate resignation.

Should Byers quit? Have your say on our Message boards .

Winsor levelled his indictment when he appeared before the Commons Transport Select Committee. Under questioning from Tory MP Anne McIntosh, he said that at a meeting on 5 October Byers spoke of introducing emergency blocking legislation if the Rail Regulator applied for an interim review which would have bailed out Railtrack.

Winsor said: 'After pausing to consider whether I had really heard what I had heard, I asked whether that would be to overrule me in an interim review or in relation to all my functions. Byers said it would cover everything, but in practice would be in relation to an interim review which the Government did not want to proceed.'

Winsor said he warned Byers of the 'extremely severe' adverse impact on the financial markets if the Government was seen to be taking away his independence. There would be damage to transport stocks and shares and 'adverse implications' for the constitutional position of independent regulators in other industries. It was also ' inconsistent' with the Government's stance during the election campaign about getting private sector capital into public sector services. Winsor even quoted the Human Rights Act to Byers.

He told the committee: 'For all those reasons, and for others I can think of now, I said: 'Would the Government really be prepared to take all those risks?' Byers said simply that if I were to proceed with an interim review that is what the Government was prepared to do.'

The regulator conceded that Byers 'might not have regarded the statement in question as a threat. I'm just telling you what he said.'

But Tories insisted his account contradicted Byers's statement to MPs on Monday that 'in terms of threats, there was no threat'. Shadow Transport Secretary Theresa May described the Winsor testimony as 'startling new evidence' and Byers's behaviour as 'shoddy and disgraceful'.

She said: 'It appears that Byers, as recently as Monday, yet again misled the House in his answer to me. He is a serial offender. His position is now untenable.'

But Byers said: 'There were no threats made to the Regulator.' Earlier this week it emerged that Byers misled MPs over the timing of his decision to shut down Railtrack. In a Commons written answer he said he decided to wind up the company on 5 October.

But a legal document revealed he had decided at least a week before. The timing is crucial because on 3 October, half of Railtrack's 250,000 shareholders took their annual dividend in shares rather than cash. It appears Byers allowed them to do so even though he knew those shares were about to be rendered worthless. His version of events was also publicly challenged this week by Railtrack chairman John Robinson.