"The Board is satisfied that it was in the public interest to broadcast (Andrew) Gilligan's story, given the information which was available to BBC News at the time," the 12-member Board of Governors said in a statement.

"We believe it would not have been in the public interest to have suppressed the stories on either the Today programme or Newsnight," they concluded following a two-hour meeting.

BBC radio reported in late May, as Prime Minister Tony Blair was visiting British troops in Iraq, that a September dossier on Iraq and weapons of mass destruction had been "sexed up" despite reservations among intelligence chiefs.

It quoted an intelligence source as citing, by way of example, the dossier's headline-making claim that Iraq under Saddam Hussein could deploy chemical or biological weapons in as little as 45 minutes.

The BBC report sparked a furious row with the government, prompting an official inquiry into the intelligence presented by Downing Street as a justification for joining the US-led war on Iraq.

Alastair Campbell, the government's director of communications and key Blair aide, appearing before the parliamentary foreign affairs committee, demanded an apology from the broadcaster, accusing it of "unethical journalism" and lies.

The BBC Governors outright rejected the claim, stressing that "the BBC's overall coverage of the war, and the political issues surrounding it, has been entirely impartial.

"(The Board) emphatically rejects Mr Campbell's claim that large parts of the BBC had an agenda against the war," the statement continued.

"We call on Mr Campbell to withdraw these allegations of bias against the BBC and its journalists."

The Board concluded that, although the BBC should be reluctant to broadcast stories based on a single source, and warned of the dangers of using anonymous sources, they clearly allowed for this to be done in exceptional circumstances.

"Stories based on senior intelligence sources are a case in point," the statement said.

"The Board wishes to place on record that the BBC has never accused the prime minister of lying, or of seeking to take Britain into war under misleading or false pretences.

"The BBC did not have an agenda in its war coverage, nor does it now have any agenda which questions the integrity of the prime minister.

The Board said it was "wholly satisfied that BBC journalists and their managers sought to maintain impartiality and accuracy during this episode".

After two weeks of hearings, the House of Commons' foreign affairs committee is to report Monday on whether Blair embellished the case for Britain to join the war on Iraq.

Political analysts expect the cross-party parliamentary panel to largely clear both the prime minister and his close aide Campbell.

WAR.WIRE