British Prime Minister Tony Blair is under pressure to sack a spokesman who suggested the deceased scientist at the centre of the 'sexed up' Iraq document scandal may have been a "Walter Mitty" character.
Mr Tom Kelly denied attempting to smear Dr David Kelly - the prime source for BBC claims that the intelligence on Iraq's weapons capability was altered to show an imminent threat to British security.
But he admitted that speaking to a journalist about the case was a "mistake" and apologised "unreservedly" to Dr Kelly's family.
Mr Kelly's remarks, which come ahead of the weapons expert's funeral tomorrow, sparked fury among his family and friends.
Prof Alastair Hay, called them "heartless in the extreme".
"This is a time of great trauma for the Kelly family and the comments should never have been made," he said.
Former Labour minister Ms Glenda Jackson called the apology "insufficient" and said the spokesman must go.
"No 10's capacity to disgust us would seem positively boundless," she said.
"We are in a situation where a man has lost his life, his family has been deprived of a husband and father and it would seem that No 10 is determined to take away his reputation. They are unspeakable."
Former UN weapons inspector Dr Kelly committed suicide after being outed as a mole during the furious battle between Downing Street and the BBC over the revelation that the intelligence services did not believe Iraq could attack Britain in 45 minutes.
Mr Blair called for "respect and restraint" while an inquiry headed by Lord Hutton investigated his death.
But an anonymous senior official at No 10 was quoted in The Independentcomparing Dr Kelly to the fictional fantasist.
"This guy was a Walter Mitty," the source told the paper.
Mr Kelly confirmed he used the term in what he called a private conversation.
"It was meant as one of several questions facing all parties, not as a definitive statement of my view, or that of the Government," he said in a statement issued by No 10.
Deputy Prime Minister John Prescott, who heads the British government while Mr Blair is on holiday, has written to Dr Kelly's widow Janice adding his apologies to those from Mr Kelly.
Mr Prescott moved swiftly to distance the Government from the controversy yesterday, saying he did not believe "these unsubstantiated remarks about Dr Kelly".
Liberal Democrat foreign affairs spokesman Mr Menzies Campbell said it showed the government must now deal with the long-term problem of the "culture of spin".
"Tom Kelly has done the right thing," Mr Campbell said.
"This unqualified apology deals with the short-term problem, but the whole episode raises some longer-term issues which the Prime Minister really must address.
Disciplinary action against Mr Kelly is a matter for Cabinet Secretary Sir Andrew Turnbull, whose office today insisted it was an "internal affair".
Labour MP Kevin Brennan, who sits on the Commons Public Administration Committee, said Sir Andrew should investigate whether the spokesman broke the civil service code.
"It appears that Mr Kelly was briefing journalists off the record with a line that wasn't a line he was supposed to take on behalf of the Government," he said.
Mr Kelly was widely expected to take on a greater role when fellow official spokesman Godric Smith leaves soon.
The pair took over daily Press briefings after the last election when Mr Alastair Campbell became No 10's communications director, a post he is expected to quit following the Hutton inquiry.
Former BBC journalist Mr Kelly, a father of four in his mid-forties, joined Downing Street from the Northern Ireland Office where he was director of communications.
His remarks have thrown the spotlight back on the Government's role in Dr Kelly's death just as tough questions were beginning to be asked of the BBC.