BBC's faith in its beleaguered reporter bolstered by services of one of Britain's best-known libel lawyers

The BBC is increasingly confident about the strength of the case it will present to the Hutton inquiry in defence of the beleaguered Today programme correspondent Andrew Gilligan. Executives are now said to be convinced that he was "100 per cent right" in attributing to Dr David Kelly comments claiming that Downing Street had intervened to strengthen the September Iraq dossier to justify its case for war.

Their bullishness stems from a detailed examination of Mr Gilligan's notes, and a growing conviction that Dr Kelly gave his Ministry of Defence bosses a different account of his dealings with the reporter to the one he made public to the Foreign Affairs Select Committee.

The BBC believes that, far from undermining its case, the letter Dr Kelly is now known to have written to his MoD line manager, stating he did not believe he could have been Mr Gilligan's primary source, may strengthen it.

In the letter, published by Lord Hutton on Friday at the formal opening of the inquiry, the late scientist claimed the content of Mr Gilligan's 29 May report was "quite different" to what he had told the journalist. He suggested the defence correspondent had either "considerably embellished" the information or used other sources.

Having analysed its own evidence, the BBC believes that the letter could be interpreted as the panic response of an official who was desperately trying to backtrack after telling a journalist more than he should have done.

Commenting on the widely held view within the BBC that Dr Kelly did in fact tell Mr Gilligan more than he admitted, one source told The Independent on Sunday: "He was a wily, experienced bureaucrat whose defence worked so long as it didn't become public, but once he was fingered by [Geoff] Hoon [Defence Secretary] and [Alastair] Campbell [Downing Street director of communications], it all started to come apart." The source added that senior BBC executives now believed Mr Gilligan's account of his conversations with Dr Kelly to be "not 80 per cent right, but 100 per cent right".

The BBC's growing sense of confidence has been bolstered by its coup in appointing Andrew Caldecott QC, the respected libel lawyer, as its counsel for the inquiry. Mr Caldecott, 51, is best known for his involvement in high-profile cases relating to the media's reporting of celebrities. The Eton- and Oxford-educated barrister helped Princess Diana to win a High Court settlement from the Mirror newspapers in 1995 after they published photographs of her working out in a gym. More recently, he represented the Attorney General in the contempt of court action brought against the Sunday Mirror for reports that led to the collapse of the first trial of footballers Lee Bowyer and Jonathan Woodgate.

One of his finest hours, however, came in February last year when he cross-examined Piers Morgan, editor of the Daily Mirror, while representing Naomi Campbell in her privacy case against the newspaper. Responding to Mr Morgan's joke that, in describing the supermodel as a "chocolate soldier", the Mirror was being no more racist than people who drink hot chocolate, Mr Caldecott dismissed his remark as showing "complete intellectual poverty".

The BBC is hoping that Mr Caldecott's sharp tongue, and even sharper eye for detail, will become one of its trump cards. However, his effectiveness in presenting the corporation's case will depend in large part on the thoroughness with which its own team of lawyers has prepared it in advance.

The BBC's inquiry preparation team has been split into two distinct operations - legal and editorial - separated by a "Chinese wall" that will prevent either group's material from being confused with the other's.

Heading a trio of in-house lawyers is Sarah Jones, the head of legal of services. The editorial operation is being co-ordinated by the veteran television news executive John Morrison. It is his task to sift "the wheat from the chaff" in cataloguing the information the BBC is likely to find useful as it attempts to convince Lord Hutton of the veracity of its reporting.

Both teams will produce the material they have collated for the inspection of four key players: Richard Sambrook, the director of BBC News, his deputy, Mark Damazer, the corporation's chairman, Gavyn Davies, and its director-general, Greg Dyke.

Though Lord Hutton revealed on Friday that he had already received a large amount of material in support of the BBC's case, insiders say the final submission will number "hundreds of pages". Among the items included will be the Psion organiser on which Mr Gilligan detailed his conversation with Dr Kelly, Mr Hewitt's shorthand notes, and the all-important tape which the Newsnight science correspondent Susan Watts used to record her own discussion with the scientist.