Kelly exit fallout hits No 10

Bitter recriminations within the Cabinet are overshadowing an impending reshuffle following the exit of Ruth Kelly.

Gordon Brown is expected to reshape his Cabinet next week after the botched announcement in the early hours of Wednesday that Ms Kelly would resign from her post as transport secretary for “family reasons”.

It is not yet clear whether Ms Kelly was forced to leave because of a negative reaction to Mr Brown’s speech as party leader on Tuesday.

The Conservatives claim an Observer journalist overheard her describe the speech as “awful”, but the journalist in question has said this is categorically untrue.

Ms Kelly is also a high-profile opponent of the government’s embryology bill, which will be voted on soon.

The manner of her departure has created a swirl of news stories about divisions at the top of the government.

Those close to the prime minister are believed to suspect Blairite enemies of deliberately leaking the story. Opponents of Mr Brown were even reported to be considering a group resignation.

The Guardian newspaper quoted one Cabinet minister as saying: “Gordon made the best speech I have heard him make. But the overnight events mean that he is now back to square one. He will be toast by Christmas.”