Hoon said last week he had been merely "aware" of the highly unusual decision to name Kelly and implied that civil servants had approved the idea. But Richard Taylor, Hoon's special adviser, told the inquiry that Hoon had chaired a meeting at which the strategy was finally authorised.
The final day of the first stage of the inquiry also heard that Kelly had been threatened by Ministry of Defence officials that his pension and security clearance would be affected by his contact with the BBC reporter Andrew Gilligan.
The Government has consistently denied reports that the scientist's pension was under threat as a result of his coming forward to admit he had met Gilligan. But Olivia Bosch, a former United Nations weapons inspector and close colleague of Kelly, told the inquiry of the threats.
"He said he had been given a kind of quiet reprimand and there was something to the effect about his pension and clearance might be affected," Bosch said.
Gilligan also faces fresh questions about his own evidence after Bosch said Kelly was "taken aback" by the way the BBC reporter used a "name game" to elicit information from him.
Gilligan has maintained it was Kelly who first came up with the name of Alastair Campbell, Downing St's director of communications and strategy.
But Bosch said Gilligan had suggested the name "Campbell" as the person who interfered with the Iraq dossier.
"He could not confirm or deny, but he thought he had to give an answer so he said 'maybe'."
Hutton adjourned the inquiry until September 15 to decide which witnesses he will recall for cross-examination in a second stage of hearings. The recalled witnesses, who are expected to include Gilligan and Hoon, will be questioned to clarify their earlier answers, Hutton said. But those not recalled to give evidence may be criticised in his final report.
He ended the first phase of his inquiry with a warning to the press not to draw conclusions from the list of witnesses he chooses to recall for detailed cross-examination.
He also said he may call fresh witnesses.
Hutton said the hearings had been designed to obtain a full and detailed account of the factors affecting Kelly before his death and the investigation after his body was found.
During the second stage of the inquiry, witnesses will be subject to cross-examination by their own lawyers and lawyers for other interested parties.
Hutton said: "When it becomes known whom I intend to call in the second stage of the inquiry, speculation as to whether certain persons may or not be subject to criticism may well be ill-founded.
"The fact that I recall a witness to give further evidence in the second stage of the inquiry does not necessarily mean that I regard that person as a possible object of criticism."
Meanwhile, Blair admitted this week that he had had some tough times recently, but vowed he would not change course on the central planks of his domestic political agenda.
He echoed Margaret Thatcher's "the lady's not for turning" speech to the Conservative Party conference in 1980, when she defied her party critics. He faces a rough ride at next week's Trades Union Congress conference and the Labour conference three weeks later on Iraq, foundation hospitals, tuition fees and public-private partnerships.
Asked at his monthly Downing St press conference if he was having "a Thatcher moment", Blair replied: "I don't know how you are going to describe it. I think you are going to have to take it as a Blair moment for the moment."
Dismissing the idea that he might stand down, he said: "I carry on doing the job because I believe in what I am doing.
"It has been a tough time for obvious reasons. I do not believe that we should change our course, because we believe in it."
He knew there was concern "about whether that course that I set out is right" but "I have total confidence that, however tough the times have been, we will win through."
But his attempt to use the press conference to shift the political spotlight back to the Government's domestic policies was undermined by a barrage of questions on the growing problems in Iraq and the Hutton inquiry.
Blair refused to discuss the inquiry, saying it was for Hutton to "do the judging". He acknowledged that there was a serious situation in Iraq but he expressed caution about a call from the Foreign Office for the number of British troops stationed there to be increased by 50 per cent to 15,000.
Hailing "evidence of significant progress" on domestic issues, Blair said: "None of this progress has been achieved except by change and reform."
Conceding that the Government had not fully explained the reasons for its reforms, he said: "Our immediate task is to go out and seek to unify people around an understanding of what we are trying to achieve and why."
He suggested that would be a key task for the new Downing St communications set-up announced following Campbell's resignation. Asked if the changes would mean the "end of spin", Blair said: "I think they will strengthen our ability to communicate in a proper and legitimate way."
- INDEPENDENT
Hutton inquiry website
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
