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Other heads at the top of the corporation could also roll - the Board of Governors is meeting tonight.
The BBC has admitted certain allegations it made were wrong, while insisting it never accused the Prime Minister of lying.
Our Home Affairs editor Mark Easton examines how the Hutton report has exposed the inner workings of the BBC.
This is the story of how the failings of a BBC employee - a small cog in the inner workings of a huge corporation, led one of Britain's most respected institutions to crisis point.
It was seven minutes past six on the morning of 29th May last year when the Today programme's Defence Correspondent Andrew Gilligan took to the airwaves.
Gilligan had been recruited by the BBC from Sunday newspapers to add zip to the Today programme. Not just to report news but to "make news". That morning he certainly did.
It appeared to be a huge scoop for the BBC reporter - set to dominate news on virtually every outlet in the country.
As Lord Hutton puts it in his report, Andrew Gilligan had broadcast “an extremely grave allegation which attacked the integrity of the Prime Minister and the Government.”
But it was an allegation, Lord Hutton concludes, that was "unfounded". In fact, he suggests the reporter made the story up.
"I am satisfied that Dr Kelly did not say to Mr Gilligan that the Government probably knew or suspected that the 45 minutes claim was wrong.
“I am further satisfied that Dr Kelly did not say to Mr Gilligan that the reason why the 45 minutes claim was not included in the original draft of the dossier was because it only came from on source and the intelligence agencies did not really believe it was necessarily true."
Small wonder that at 7.15 on the morning of the broadcast, a Number Ten press officer rang Today to say "the allegations were totally untrue”. But from that day to this the BBC has attempted to stick by its story - more or less.
At the time of the broadcast, the Today programme was well used to getting complaints from Downing Street in general and Alistair Campbell in particular.
But Lord Hutton concludes that on this occasion their systems were "defective".
He recognises that investigative journalism is a vital part of democratic life but says: "Where a reporter is intending to broadcast or publish information impugning the integrity of others, the management of his broadcasting company or newspaper should ensure that a system is in place whereby his editor or editors give careful consideration to the wording of the report and to whether it is right in all the circumstances to broadcast or publish it."
In other words, if you are going to publish serious allegations, your editor must be darn sure you're right. But that's not what happened on the Today programme.
“The editorial system which the BBC permitted was defective in that Mr Gilligan was allowed to broadcast his report at 6.07am without editors having seen a script."
The reporter went on national radio impugning the integrity of the government and the PM, and no-one had checked with him that the story was right.
Later as Lord Hutton points out, the Today programme editor Kevin Marsh wrote an email admitting that the story had been "marred by flawed reporting - our biggest millstone has been his loose use of language and lack of judgment in some of his phraseology."
But on the same day that that email was sent BBC management wrote to Alastair Campbell saying "we have to believe that you are conducting a personal vendetta against a particular journalist whose reports on a number of occasions have caused you discomfort.
Alistair Campbell marched into the Channel 4 News studio to give his response.
Even after what Lord Hutton says were complaints expressed in exceptionally strong terms, which raised the temperature, Lord Hutton says, "BBC management was at fault in failing to investigate properly the government's complaints."
Greg Dyke, Director General and nominally editor-in-chief didn't actually check what Gilligan had said for some weeks after the broadcast.
YOUR VIEW
Viewers text messages:
Flak to the Govt from the Hutton report inspires updating an adage re. booze & a brewery... They can"t organise a whitewash in a paint factory.Cat, Kent.
I believe Lord Hutton's criticisms of the BBC were valid but his conclusions on the Governments actions were insufficient.
if hutton had decided in favour of the bbc presumably jon snow would not have asked for opinions , never upset a journalist. j. wood reading
I WOULD RATHER TRUST THE BBC THAN THE CURRENT GOVERNMENT. MAUREEN
The BBC was condemned for its honesty,the Govt cleared for its duplicity.Has Hutton not heard of the Govt's plagiarising a students thesis? Cat,Kent.
THIS ESTABLISHMENT STITCH UP WILL ULTIMATELY HAUNT BLAIR. ITS NOT THE BBC THAT"S DISCREDITED & IT WILL PROVE A HOLLOW VICTORY FOR BLAIR ET AL. SARAH
Hutton enquiry was unfairly 1 sided in favour of the Government. What is our justice system coming to? Why was Dr Kelly hung out to dry in such a way?
If I chose my own judge and jury I'm sure I could get off on any charge also! Whitewash, Tom, Aberdeen
I AM NOT SURPRISED BY THE VIEWS OF CHESHIRE MAN AND SUSSEX WOMAN. TRUE BLUE TORIES DONT CARE ABOUT THE FACTS ALL THEY WANT IS A RANT AT LABOUR.
To give benefit of doubt to members of the intell service whose purpose is to control information is a flaw. The establishment is celebrating. Sham. London
What an establishment stitch up. We were cheated to war with a dodgy dossier and a blind slavery to the US. Forget Hutton. Obfuscation is king
BLAIR LOST MY VOTE OVER THE IRAQ WAR.HUTTON HASN'T WON IT BACK. R.GREENHILL.LEICS.
Utter dismay. Hutton report totally unbalanced. Ali Campbell’s obsession with controlling media & BBC caused the whole affair & by association so did PM.
Government and Law Lords all in it together
The Hutton report is a total whitewash. Shannon from Marston, Bedford
Viewers emails:
A good day for British journalism, this report will encourage journalists in the BBC and beyond to focus on verifiable news and information rather than unsubstantiated opinion and sensationalism where the story has become the master rather than the truth. Let’s hope that we will all benefit from higher a quality of reporting and proper journalism with appropriate controls.
Andrew Snowdon
What an establishment cover-up. I hope the BBC carry on fighting and refuse to accept this travesty.
What a black day for independent journalism.
Paul Carter
Hutton gave his verdict, against the BBC and in favour of the Government. Given the evidence this always seemed inevitable. The only reason people thought otherwise in the last 7 months was because the media was trying to defend itself against the indefensible and spinning against the Government. Now with the verdict, the media starts to spin against Hutton. Channel 4 News last night was outrageously biased, as Jon Snow rushed to defend his profession against all-comers. The self-interest and bias of TV media news was nakedly displayed, and in itself justified the tenor of the Hutton Report.
Bruce, London
I do hope that Channel 4 will back the freedom of the BBC - having lived in the USA for a number of years until the mid 80s, I am only too well aware of the importance of independent broadcasting and having news providers being able to act in a way that they fell appropriate.
The deluge of new laws that this (and other recent governments) have introduced, make me feel more and more every day that we are living in a police state - the nanny state was bad enough - but this Hutton Report will be utilised in a sinister and underhand fashion I am sure by all those in power, whoever they may be.
In this pseudo democracy the peoples voice is heard only via the media and sometimes through the House of Lords. I am very sorry that Mr. Kelly's family and the death of Mr. Kelly has been used in this way. Who is this Hutton man anyway? What are his credentials?
As I write a blizzard with thunder and lightening ominously colours this email. It is a white wash - and very convenient in it's conclusion.
Julia Burley, Ewhurst, Surrey
Hutton has proved to be an expensive and time consuming sham. Molly Ivins has neatly described the machismo that is dragging us down into a spiral of over-spending and duplicity. No amount of Hutton’s pronouncements can excuse Campbell, Blair and the rest of their supporters who led us into war.
We ought to have intervened a lot earlier to save the carnage in former Yugoslavia, but the shattered hopes in Palestine that Jenny Tonge highlighted is another unforgivable broken pledge of the Bush alliance.
There are plenty of citizens who will not minimise or overlook the suffering of the Palestinians or any other vulnerable, disadvantaged or brutalised people, whether old people, children or anyone else in Britain, Europe or anywhere else. We are sustainability practitioners, who want quality of life through self-determination. We are hindered in our aims by an overweeningly arrogant and authoritarian system that spends our money without giving us a say.
Hutton is on the radio saying that the BBC should not have broadcast the allegation, but why not? Politicians lie everyday, allegations in my opinion can be legitimately voiced and heard, and investigated. Better to speak out than risk a cover-up.
The MOD is guilty of bureaucratic bungling viz overspending by £3 billion on defence systems. This government is not acting in our name, not in this instance nor in many others.
Rita Grootendorst, Sidcup Community Group
As ever, the real issues are skirted around. There were millions of us in the streets around the world begging him not to go to war. He ignored us, and it turns out he was wrong. Whether or not the Prime Minister believed the intelligence or lied about it is irrelevant.
It's interesting that the results of the Hutton report and the resignation of Dr. Kay came at the same time. It's more than interesting that the Kay report and the Hutton report say such curious things.
The basis for the United States and England going to war with Iraq was WMD possessed by Saddam Hussein. Yes, he was, and yes, he is a bad man, and, no, that was not the reason that George W. Bush and Tony Blair went to war.
Now it's been pretty well established that there are and were no WMD in Iraq before the war and Hussein was
not an "imminent" threat. He was only a "gathering and grave" threat according to the recent words of president Bush.
So, if nobody--in the United States or England--"sexed up" the evidence on WMD as the basis for going to war
with Iraq, why did the evidence prove to be so wrong? Why will it be any better the next time, or any time?
Does this mean that the only thing to be done is to make the best of a sadly botched job and forget about the hundreds of dead and the thousands of wounded American and British soldiers as well as countless numbers of innocent Iraqi civilians?
Richard E. Walrath
As Hutton said at the beginning of his statement, his remit was to enquire into the death of Dr. Kelly. Therefore, the many wider questions which were raised during the Hutton enquiry remain unanswered.
Is it time for a proper inquiry into the Prime Minister's War in Iraq, finally?
Sarah Meyer, E. Sussex
It is a well-known fact that when industries commission and fund research on their products, the findings are rarely unfavourable to that industry -- the the tobacco and drug industries are good examples.
This does not necessarily imply a conscious conspiracy on the part of those researchers - nevertheless they have vested interests to protect.
I don't wish to cast aspersions on the integrity of Lord Hutton, but can we really be so surprised that he found Blair, who after all appointed him, not to be culpable of any wrongdoing?
I can't help feeling that the outcome could, and probably would have been very different had someone else carried out an "independent" inquiry!
Tom McMaster, Manchester
Well, Blair has done the impossible again. The man is never wrong about anything. He should be thoroughly ashamed of himself for the way I believe he has manipulated the facts in this sordid little tale.
Perhaps as we went to war to liberate a tyrannical regime, some foreign power will do the same for us.
This government is possibly the most corrupt and power crazed of recent times. They couldn't lie straight in bed! Keep digging C4, you are a breath of fresh air at news time.
Tony Harrison, Wallasey
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