IDS threatened to sue aide

The top woman Tory at the heart of allegations about Iain Duncan Smith's payments to his wife was threatened with legal action after refusing to make a statement exonerating him, the Evening Standard has learned.

Vanessa Gearson was sent a letter by solicitors acting for the Conservative leader last week after she protested to him about feeling pressured to issue a version of events she did not believe.

Their exchange of legal letters is now set to form crucial evidence for the inquiry into the affair by parliamentary standards commissioner Sir Philip Mawer.

One Tory figure said the correspondence, if published, would be "highly damaging", as it suggested an attempt to hush up the affair.

The disclosure came as a rattled-looking Mr Duncan Smith gave a tetchy performance when questioned about the "Betsygate" affair at a press conference in Looe, Cornwall.

Wearing a fixed smile, he urged the public to wait for Sir Philip to report, and told questioners: "Maybe you are psychic, I don't know. I'm just like everybody else - normal - and I give the evidence I give and wait for the outcome of the inquiry." As questions continued unabated he barked: "Settle down, this is a press conference, behave yourself."

Sir Philip is investigating claims - furiously denied by Mr Duncan Smith - that he paid a salary to his wife from taxpayer funds for work she did not carry out.

Although Mr Duncan Smith has rebutted the allegation with a 40-page dossier of statements from staff backing his version, today's new revelation open a new front for Sir Philip's inquiry on whether party officials put unfair pressure on a key witness.

The legal exchanges came after Dr Gearson sent a private letter through her own solicitor to Mr Duncan Smith last Friday. She is said to have protested that her integrity was under threat.

In response, she received a letter from the Conservative Party's solicitors, Reynolds Porter Chamberlain-which allegedly warned her of legal action if she made her views public.

A spokesman for Mr Duncan Smith refused to confirm or deny the claims, saying: "This is an employer-employee matter."

Dr Gearson, who is to stand as a Conservative candidate at the next election, has vowed to "tell the truth, whatever the cost".

The Opposition leader stepped up his fightback today with an article accusing "irreconcilable malcontents" of dividing the party.

Meanwhile, Cherie Blair made an unexpected intervention in the saga - to sympathise with Mrs Duncan Smith. The Prime Minister's wife said: "I always feel sympathy with every woman who is trying to juggle a lot of tasks."

Asked in Belfast if she had any sympathy for the Opposition leader's wife, she replied: "I have sympathy for anybody who is hounded by the press."