A "chain of events" linked former Home Secretary David Blunkett to the speeding up of his ex-lover's nanny's application for leave to remain in Britain, an official inquiry found yesterday.

But former Treasury advisor Sir Alan Budd said he was unable to prove whether Mr Blunkett had issued instructions for Leoncia Casalme's case to be fast-tracked, or whether he raised it as an example of poor performance in his Immigration and Nationality Directorate (IND).

Last night, Sir Alan's report was being viewed as an "open verdict" which left serious question marks over Mr Blunkett's conduct.

But Downing Street said Tony Blair, who was visiting Iraq yesterday, held firm to his view that the Sheffield Brightside MP left the Government with his integrity intact.

That was interpreted by many at Westminster as leaving the door open for Mr Blunkett to return to the Cabinet after the General Election.

Tory leader Michael Howard was among those predicting such a resurrection.

Mr Howard said: "Heads don't roll in this Government. They simply take time out."

The Budd Report came an hour after a separate report by the Parliamentary Standards Commissioner Sir Philip Mawer, who found that Mr Blunkett breached Commons rules by giving his former lover, Kimberly Quinn, a rail warrant worth £179.

Sir Philip said Mr Blunkett was in clear breach of parliamentary rules, which state that the rail passes may be used only by MPs' spouses.

Mr Blunkett has already admitted he was wrong to give Mrs Quinn, publisher of The Spectator magazine, the tickets, and has repaid the money.

The Commons Standards and Privileges Committee accepted Sir Philip's findings, but did not recommend any further action.

Sir Alan's inquiry followed Press allegations that Mr Blunkett intervened to fast-track Ms Casalme's application as a favour to Mrs Quinn.

The key piece of evidence was an e-mail exchange uncovered by a trawl of telephone, fax and e-mail records.

On May 8, last year, Mr Blunkett's private secretary for immigration messaged the private secretary of the Immigration and Nationality Directorate's director general, asking if there was any update on "the case I faxed through to you the other day".

The next day, a response came: "Sorted - she has been granted ILR (indefinite leave to remain) - papers will be sent to her shortly. The case was in ICU (initial consideration unit), so they pulled it out of the queue and made a decision - (no special favours, only what they would normally do - but a bit quicker)."

Sir Alan said this exchange lay at the heart of the case.

No trace was found of the fax, which might have made clear how the directorate was asked to handle the case.

Ms Casalme initially applied for leave to remain on March 15, last year. Her case was considered on April 23 and a letter sent that day saying it might not be resolved until January this year.

Mrs Quinn told Mr Blunkett of her nanny's difficulties on or about April 28, and the letter was taken into his private office at some point that week.

The case was raised with the directorate by an official in Mr Blunkett's office and, as a result, the case was reconsidered on May 6 and a decision taken to grant Ms Casalme leave to remain.

Sir Alan made clear that the speeded-up handling of the application was "the effect of the intervention" by Mr Blunkett's office.

Sir Alan said: "I believe that there are two broad possibilities: Mr Blunkett was seeking special help for Mrs Quinn's nanny, or he was raising the case as an example of the poor performance of IND.

"I do not have direct evidence that allows me to choose between the two possibilities."

In a statement, Mr Blunkett accepted Sir Alan's report and said: "I wish to make it clear that at all times I have told the truth as I knew it. But I also accept that there are lessons to be learned."

* A Guardian/ICM poll published yesterday suggests that 61 per cent of people would approve of Mr Blunkett being given another senior position within a Labour Government at a future date