One of Gordon Brown's senior officials has resigned after sending e-mails which discussed smearing senior Tories.
Damian McBride, the prime minister's former political press officer, had apologised after the messages found their way to a Westminster blogger.
In them, Mr McBride made obscene and unfounded claims about David Cameron's and George Osborne's personal lives.
He called the suggestions "a few ideas I've been working on for Red Rag" - a reference to a Labour website.
Mr McBride also wrote in the e-mails, sent from his official Number 10 address, that he had used a bit of ''poetic licence'' based on what was known, to ''put the fear of God into Osborne''.
He described the first as a ''solid investigative story'', but the other three as ''mainly gossipy, and intended to destabilise the Tories".
Mr McBride added: ''Let's think about how to sequence these in with others'' - a suggestion that a longer-term plan to place stories was being hatched.
Allegations were also made against the Tory backbencher Nadine Dorries, who says she is consulting her lawyers.
Paul Staines, writer of the Guido Fawkes blog, described the messages sent by Mr McBride as "obscene".
A Number 10 spokesman said the messages were "juvenile and inappropriate".
The spokesman added that nobody in Downing Street knew of the e-mails and that it was Mr Brown's view that there was "no place in politics for the dissemination or publication of material of this kind".
The Tories said it was absurd that advisers were "plotting smear campaigns rather than focusing on how to help people affected by the downturn".
In his resignation letter, Mr McBride said he was "sickened" that Mr Staines had put the e-mails in the public domain and that he regretted embarrassing the government.
GUIDO FAWKES' VIEW
Paul Staines, author of the Guido Fawkes blog
Mission accomplished - McBride fired.
These are e-mails that orchestrate a campaign against Tory MPs and opponents of Downing Street.
This is not just a spat... this is evidence of a long-term smear operation run out of Downing Street.
Mr Staines told the BBC: "The e-mails are intended to be anonymous smears; they are obscene in cases, and would be impossible for a newspaper to publish. They're libellous and they're untrue.
"In the e-mails, Damian McBride admits to using 'poetic licence'. He's a civil servant, he's exempt from the restrictions on being impartial and political, he's not exempt from telling the truth."
Ms Dorries said: "I want an apology from the prime minister.
"It's completely unacceptable that this kind of behaviour takes place using taxpayers' money."
Shadow home secretary Chris Grayling said: "This whole episode has been quite disgraceful.
"This resignation is a clear admission that Gordon Brown's team at Number 10 were involved in a deliberate attempt to spread unpleasant false rumours about opposition politicians.
"Gordon Brown needs to provide a clear explanation about what happened and who else was involved."
Cabinet Office minister Liam Byrne said he thought Mr McBride had "done the honourable thing."
But he stressed the emails had not been intended for publication.
"I think it is unfortunate that there are some people in the media who have decided to try and put these emails into the public domain, wave them in the public's face, when even their very author decided that actually there was no place in public life or for public consumption for these emails, the right place for them was the bin.
"We do not think that there is any place in politics for innuendo, rumour or gossip. It just brings public life down."
Mr McBride, a special adviser in Downing Street, was removed from his job dealing with the media on a day-to-day basis in September 2008.
He had stayed on in Number 10, and was given responsibility for strategy and planning.
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