LONDON, March 25: Prime Minister Tony Blair had come too close to being questioned by the police as a suspect rather than a witness in the cash-for-honours case but the police backed off after being warned that it could lead to his resignation, The Sunday Telegraph has revealed.

According to ST report allies of Mr Blair indicated to Scotland Yard that his position as prime minister would become untenable if he were treated as a suspect, rather than simply as a witness.

However, according to the same report, on Saturday night a spokesman for Mr Blair denied that he had been "going around saying he will resign if that happened (being interviewed under caution). It is not true that such a message was conveyed to the police."

Detectives had hoped to question the prime minister under caution during the second of two interviews at No 10. It is understood that they wanted Mr Blair to clarify comments he had made during his first interview about an alleged cover-up by his senior aides.

Scotland Yard has, however, not ruled out interviewing Mr Blair for a third time if there is important new evidence to put to him. It is even possible that, as the inquiry drags on, Mr Blair could be interviewed -- possibly as a suspect -- after he steps down as prime minister in some three months.

Assistant Commissioner John Yates, who heads the cash-for-honours inquiry, told MPs this month that it would be "unrealistic" to set a deadline for completing the investigation. He said that he could not be rushed because some evidence raised "complex and challenging legal issues".

It can also be revealed that relations between Scotland Yard and Downing Street remain deeply strained. There were tensions over the first police interview with Mr Blair on Dec 14, which -- unusually for a meeting not under caution -- was tape recorded. Some days later, detectives sent minutes of the interview to Mr Blair's office to be "signed off" for Downing Street to agree the typed notes were an accurate reflection of what had taken place.

Downing Street refused to sign them off even when detectives reminded political aides that the interview had been recorded and they were merely supplying a transcript of events. More than three months after the interview, the issue remains unresolved.The restricted conditions of Mr Blair's second interview enabled No 10 to play down the significance of the police seeing him for the second time in only six weeks. A spokesman said at the time: "The prime minister has been interviewed briefly to clarify points emerging from the ongoing investigation. He was interviewed as a witness, not as a suspect and co-operated fully."

The fact that Mr Blair has not been interviewed under caution means it is unlikely any of the answers he has given so far could be used against him to bring charges. Legal experts say any solicitor is likely to argue that evidence from a routine interview -- not treating someone as a suspect -- should be declared inadmissible by a judge.