Whitehall defends Cassani

Senior government figures today defended the woman heading London's bid to stage the 2012 Olympics after she appeared to fall victim to a dirty tricks campaign.

Barbara Cassani was caught in a storm following claims in a national newspaper that she made an extraordinary outburst about the Prime Minister's intelligence.

The US-born businesswoman fiercely denies making the remarks, but the incident has been used as an opportunity by her enemies to undermine her position.

It has since been claimed that several PR firms hoping to represent London's £ 3billion bid are questioning whether she has what it takes to succeed.

Now senior Whitehall figures have stepped in to defend London's Olympic ambassador, saying there is no conspiracy to ditch Ms Cassani, 42. "There is absolutely no truth whatsoever in suggestions that the Government does not want her to continue," said one.

Mr Blair is known to be happy with the way the former chief executive of nofrills airline Go has got the bid off the ground after starting last June with a blank piece of paper, no offices and no staff.

A source close to her told the Evening Standard she had been "shocked" by the newspaper story because it was "so fundamentally untrue".

He said: "She believes her personal integrity has been put in jeopardy. That integrity and her relationship with the Prime Minister is important to the bid."

On Tuesday the Daily Telegraph's Londonspy diary page reported Ms Cassani - who two months ago stood next to a smiling Mr Blair when London's bid was launched - as saying: "I was invited to dinner with Blair recently, but to be frank he wasn't that bright."

That would have been damaging enough but, according to the Telegraph, Ms Cassani went on to say: "He took an interest in what I was saying, and has this ability to make it seem as if he cares, but he didn't seem particularly knowledgeable about anything.

"I was asking about his links with America and he didn't seem certain about what he was saying. He asked me lots of questions about what I thought but his responses to my questions were slow."

Ms Cassani immediately denied making them and has demanded a full apology and retraction from the Telegraph. She has also written to Mr Blair to reassure him.

An Evening Standard reporter was also at the event when Ms Cassani is said to have made the belittling remarks about Mr Blair to the Telegraph. Evening Standard's account of her comments differs markedly to the Telegraph's.

Far from sniping at the PM she said: "He was delightful.

He was really interested in my views." According to our reporter's shorthand note she said: "The Olympic bid is going really well. The warmth from the whole country is really quite stunning."

The report in the Telegraph, previously an enthusiastic supporter of the bid, has been used by some as an excuse to launch a whispering campaign against Ms Cassani.

The following day The Guardian claimed four major PR firms felt Ms Cassani's international profile was too low to impress the International Olympic Committee. The four - Hill & Knowlton, GCI, Bell Pottinger, and Ketchum - did not comment but were said to have identified her as "a potential weakness".

The paper also claimed Ms Cassani has been criticised privately within the IOC for adopting a low profile. But one senior IOC member said: "This is just internal politics."