The inquiry is investigating the apparent suicide of Kelly after he was named as the main source of a report by BBC journalist Andrew Gilligan that No 10 had interfered with the Iraq dossier.
It heard evidence from five witnesses and trawled through dozens of pieces of documentation yesterday.
Senior Ministry of Defence officials admitted under questioning that Kelly was regularly used by the Government to put forward its position on weapons of mass destruction to the media, and had been praised for his efforts on the matter.
The first witness to appear before Lord Hutton at the High Court contradicted the Government's assertion that Kelly was nothing more than a middle-ranking technical official. Former Army colonel Terence Taylor said the late scientist had a "very high quality reputation" and played a key role in uncovering Iraq's chemical and biological weapons programme.
Taylor, now president of the International Institute of Strategic Studies in the US, said he spoke to Kelly by telephone four days before his death. "He seemed to me to be in a normal state of mind. I did not detect any discernable difference."
There was some relief for the Government over the highly-damaging claim that the Prime Minister's chief of communications, Alastair Campbell, had the "45 minutes" threat inserted into the September dossier, and that it was done despite Downing Street knowing the claim to be false.
High-powered Whitehall officials including deputy director of defence intelligence Martin Howard, and Julian Miller, chief of the assessment staff in the Cabinet Office, insisted these allegations were untrue.
But as James Dingemans, counsel for the inquiry, produced internal documents showing disquiet within the Defence Intelligence Service, Howard had to concede that his staff had contacted their line managers about the dossier.
One letter to him said: "As possibly the most senior and experienced officer on the field of Iraqi WMD, I was very concerned about the manner in which intelligence assessment for which I had some responsibility was being presented in the dossier of 24th September 2002 that I was moved to write formally to Tony Cragg recording and expressing my reservations."
Cragg was Howard's predecessor at Defence Intelligence.
Dingemans read from another official document noting intelligence officers expressed concerns about the way language had been hardened up over the 45 minutes claim.
The concern had related to the "level of certainty" about the claim expressed in the dossier's foreword and the executive summary.
"The executive summary expressed the point differently as a judgment. The personnel concerned did not share its judgment but it was agreed by the Joint Intelligence Committee," the document noted.
It went on to say Defence Intelligence officers also disagreed with the claim in the dossier that intelligence "shows" Saddam attached great importance to possessing weapons of mass destruction. "They judged that it only 'indicated' this."
Dingemans also read from an email written by a member of DIS who had consulted Kelly over an assertion that United Nations weapon inspectors had been unable to account for 20 tonnes of biological growth agents.
The DIS officer wrote that he had been told by Kelly: "The existing wording is not wrong but it has lost (sic) of spin on it."
Howard said that the individual had intended to type: "It has a lot of spin on it", although he said the phrase "a lot of spin on it" had been the officer's, not Kelly's.
Richard Hatfield, the MoD's director of personnel, criticised Kelly for a "basic breach" of Government confidence in his briefings to journalists, especially Gilligan and had "strayed beyond providing technical information".
"My interpretation, I'm afraid, of thinking back over his history is that he could not have done that without realising he had gone outside the scope of his discretion."
- INDEPENDENT
British Parliament Foreign Affairs Committee transcript:
Evidence of Dr David Kelly
Key players in the 'sexed-up dossier' affair
Herald Feature: Iraq
Iraq links and resources
