Whitehall's most senior civil servant has ordered an inquiry into the leak of a UK Government account of a private meeting between Scottish National Party leader Nicola Sturgeon and the French ambassador to the Telegraph.
The Scottish First Minister demanded the leak inquiry as she denied claims that she told ambassador Sylvie Bermann that she would prefer to see Conservatives remain in power after the 7 May general election.
The leaked memo was written by a Scotland Office civil servant following a conversation with consul-general Pierre-Alain Coffinier regarding the meeting between Sturgeon and Bermann, who was on her first visit to Scotland in February.
According to a copy published on the Daily Telegraph website, it said: "Discussion appears to have focused mainly on the political situation, with the FM stating that she wouldn't want a formal coalition with Labour; that the SNP would almost certainly have a large number of seats … that she'd rather see David Cameron remain as PM."
The note went on to say that Sturgeon had said she did not think Labour leader Ed Miliband was "prime minister material".
However the civil servant appeared to doubt whether the report accurately conveyed Sturgeon's comments, adding: "I have to admit that I'm not sure that the FM's tongue would be quite so loose on that kind of thing in a meeting like that, so it might well be a case of something being lost in translation."
Sturgeon described the allegation as "100 per cent untrue" and said she had written to Cabinet Secretary and head of the civil service Sir Jeremy Heywood to demand a Whitehall probe into how the newspaper obtained the document.
Sir Jeremy later responded: "You have asked me to investigate issues relating to the apparent leak of a Scotland Office memo that forms the basis of this morning's Daily Telegraph story.
"I can confirm that earlier today I instigated a Cabinet Office-led leak inquiry to establish how extracts from this document may have got into the public domain. Until that inquiry is complete I will not be making any further comment either on the document or the inquiry."
Sir Jeremy is thought to be particularly concerned at the allegation of a leak because of the sensitivity of its timing, during one of the most finely balanced general elections of modern times.
It came at a time when polls suggest that the SNP is on track to seize dozens of Labour seats north of the border, and Ms Sturgeon's personal popularity is soaring in the wake of a well-received performance in this week's televised leaders' debate.
She said the story was a sign of "panic" in Westminster over the surge in support for the nationalist party, and issued a challenge to Labour leader Ed Miliband to state publicly that he would work with the SNP to "lock out" David Cameron from Downing Street in the event of a hung Parliament.