Cherie Blair forced to admit links to convicted fraudster

Cherie Blair accepted full responsibility last night for the misleading statements issued by Downing Street denying that convicted fraudster Peter Foster had helped the Blairs to buy two flats.

In an attempt to limit the damage to the Government's reputation, Mrs Blair sought to make clear the Prime Minister's two official spokesmen did not lie to the media when they insisted earlier this week Mr Foster had not negotiated on the Blairs' behalf during the purchase of the two flats.

After a series of e-mails showing Mr Foster was acting for the Blairs were leaked yesterday, Mrs Blair was forced to issue a statement admitting his role. The admission raised new questions about the credibility of the Government's media operation.

Amid a welter of questions over whether Number 10 officials tried to cover up links between the Blairs and Mr Foster, Mrs Blair issued a second statement last night making clear she had not disclosed the full picture to them.

Mrs Blair insisted she had done nothing wrong or improper but the affair also raised questions over her judgment in allowing Mr Foster to become involved when the Blairs decided to buy the two flats in Bristol, one for their son Euan to live in while he attends Bristol University and a second to rent out. Mr Foster is the boyfriend of Carole Caplin, a close friend of Mrs Blair who acts as her fitness adviser.

The Prime Minister's wife said she would been "far more circumspect" about Mr Foster's "friendly offers" to help if she had known about his past. He has been jailed in his native Australia, Britain and the United States and is currently appealing against a decision to refuse him permission to stay in the UK.

Mrs Blair said Mr Foster had helped her "for a couple of weeks of the negotiations" by talking to the property agents, making suggestions about the best price to secure and corresponding with her by e-mail. But it was during initial discussions, before Mr Foster's direct involvement, that she secured a drop in the price of the two flats from £295,000 each to £269,000 each.

The Prime Minister's wife insisted the purchase of the properties had been carried out properly and said "any reasonable person" would accept "I have done nothing improper". She added: "Mr Foster neither asked for nor received remuneration. As far as I was concerned, he was simply the boyfriend of a friend who was helping me out when I was busy." Mrs Blair added: "When all the allegations were first put I made clear that he was not my adviser. That was and is accurate. If in not wanting to put into the public domain any and every detail of what I believe to be private issues I have caused any misunderstanding between the No 10 press office and the media that is unfortunate and I regret that."

In her second statement, Mrs Blair said she "wanted to make it clear that she, and she alone, is responsible for any misunderstanding between No 10 press office and the media - but asks ... the media, to understand that as well as being in court and fulfilling her other duties, her main preoccupation was to rebut the unfounded allegations about impropriety and illegality made about her, whilst also seeking to draw reasonable lines around the confidentiality of her private affairs."

Mr Blair's official spokesman said that when denying aspects of the original story Downing Street had sought to quash specific allegations which were "false" – that the Blairs had tried to evade or avoid stamp duty, tried to persuade the sellers of the flats they could be promoted because of the Blairs' involvement and used their own positions and those of Government officials to help Mr Foster.

The spokesman said Mrs Blair decided to issue the statement because of the "continuing personal campaign" by the Daily Mail newspaper group against her. But there was no sign the Blairs would take action through the courts or Press Complaints Commission.

The spokesman suggested Mr Foster's involvement– and the inaccuracy of statements – would not have come to light if e-mails had not been leaked.

Mark Field, Tory MP for Cities of London and Westminster, said there were "serious concerns Number 10 had been economical with the truth" about the original revelations.

Last night, Mr Foster said: "I have never hidden my past from anybody. It is a past I regret but, as everybody who knows me is fully aware, I have paid my dues and have moved on, having learned from those mistakes." He added: "As far as my recent dealings and correspondence with Mrs Blair are concerned, I have always viewed them as confidential and they remain confidential."