Fine Gael Senator Liam Cosgrave has launched a vigorous defence of his reputation, accusing his party and its leader of causing him possibly irreparable political damage through what he calls the flawed and unfair report of the party inquiry into payments to councillors.

In a letter to the party leader, Mr John Bruton, published by Mr Cosgrave yesterday, he says he is "astonished" by the inquiry conclusions. They constitute a "gross defamation of my character, a situation which has been considerably exacerbated by your personal remarks concerning me".

The Fine Gael inquiry report said Mr Cosgrave was unable to give a "detailed account" of the circumstances in which he received about £3,500 from Mr Frank Dunlop between 1992 and 1999, and around £2,500 from builders and developers between 1991 and 1999.

When the report was published last Friday, Mr Bruton said he would not support the ratification of Mr Cosgrave or two other councillors - Ms Anne Devitt and Mr Cathal Boland - unless they could provide clarification of the details of the payments.

Mr Cosgrave maintains he was treated quite differently from other councillors mentioned in the report. Assurances from others were accepted, while his were not, he says. "No objective evidence of any wrongdoing on my part has been presented to the committee, yet on Friday evening I was pilloried in the press and treated as an outcast from Fine Gael."

However Fine Gael yesterday rejected criticism of the inquiry. A spokesman said Mr Bruton had replied to all of Mr Cosgrave's correspondence, indicating that a number of letters have passed between the two this week. The opportunity was still available for Mr Cosgrave, Ms Devitt and Mr Boland "to submit further information to the inquiry" to enable it to reach definitive conclusions concerning them.

Mr James Nugent SC, who chaired the Fine Gael investigation committee, in a statement last night said he refuted and categorically rejected each and every allegation of Senator Cosgrave in relation to the manner in which the inquiry was conducted and the contents of its report.

Mr Nugent went on to say he rejected the allegation that the principles of natural and constitutional justice were not adhered to by the committee.

Full text of Mr Cosgrave's letter is available on the Irish Times website, Ireland.com.