A senior civil servant said today that culture secretary Jeremy Hunt’s former aide was drawn into a “web of manipulation and exaggeration” in the circumstances surrounding News Corp’s bid for a full takeover of BSkyB.

Jonathan Stephens, Permanent Secretary at the Department of Culture, Media and Sport (DCMS) told the Leveson Inquiry this afternoon that special adviser Adam Smith, who resigned after a series of emails between the department and News Corp revealed that the company was being given advance feedback of the government’s scrutiny of the bid, was “inadvertently drawn beyond what he intended to do”.

Stephens, who confirmed he had told Hunt he felt Smith should resign due to the level of “clearly inappropriate” level of contact between the department and News Corp, said it was “matter of intense regret” that the episode occurred. Lord Justice Leveson suggested it was a “calamity” for the DCMS.

“I thought the nature, context, extent and depth of the emails meant this was far beyond what could be considered appropriate,” Stephens told the Inquiry.

He added that he was aware Smith had been in touch with the corporation, but did not know News Corp lobbyist Frederic Michel was his individual point of contact.

Events over the past month have left Jeremy Hunt fighting for his political life. Yesterday a crucial memo came to light that Hunt had sent to David Cameron in support of News Corp’s £8bn bid for control of the satellite broadcaster, sent one month before he was handed the task of adjudicating the bid in December 2010.

In the memo Hunt emphasised to Cameron that it would be “totally wrong to cave in” to the bid’s opponents, and that business secretary Vince Cable’s decision to refer the bid to regulator Ofcom could leave the government “on the wrong side of media policy”.

It was also revealed that his department and News Corp had exchanged 1,000 text messages, 191 phone calls and 158 emails as the bid was under scrutiny from June 2010 to July 2011.

Over the past two days, Smith has been scrutinised about his contact with Michel, and expressed regret for the “perception of collusion” the contact created.

He revealed today that once the emails between him and News Corp were released at the end of April, Hunt had reassured him he would not need to resign, only to be told by him the next day, “everyone here thinks you need to go”.

He resigned from his post last month following the emails’ release, conceding that his contact with News Corp “went too far”.

Hunt, who is scheduled to face questioning over the matter at the Inquiry next Thursday, has contended he acted impartially and within the ministerial code. Today David Cameron said he does not regret handing the bid to Hunt, stressing he acted “impartially”.

The Inquiry continues on Monday.

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