The Bush presidency was profoundly damaged yesterday when Lewis Libby, a top White House official who helped push for the Iraq invasion, was charged with obstruction of justice, lying to the FBI and committing perjury before a grand jury.

President Bush pauses during a speech about the war on terror in Norfolk, Virginia, October 28, 2005. REUTERS/Kevin Lamarque

Mr Libby immediately resigned his post as chief of staff to the vice-president, Dick Cheney. The president's own chief political adviser, Karl Rove, escaped indictment, but was warned that he was still under investigation in the case - a 2003 intelligence leak at the heart of the administration's case for going to war in Iraq.

Patrick Fitzgerald, who has led the two-year inquiry into how a CIA agent's cover was blown, said yesterday: "It's not over."

George Bush accepted Mr Libby's resignation, but heaped praise on him. "Scooter has worked tirelessly on behalf of the American people and sacrificed much in the service to this country. He served the vice-president and me through extraordinary times in our nation's history," Mr Bush said before flying to Camp David. He added: "Each individual is presumed innocent and entitled to due process and a fair trial."

Mr Libby, who was instrumental in shaping the evidence for the case for going to war in Iraq, was charged with two counts each of perjury (lying to a grand jury) and making false statements (lying to federal investigators), and one count of obstruction of justice (hindering a grand jury investigation into the leak).

If convicted on all counts, he could face up to 30 years in jail and $1.25m in fines. The trial itself is likely to inflict further damage on the administration, whose key officials would be cross-examined on the build-up to the war in Iraq. Mr Cheney, who was mentioned in the indictment, would probably have to give evidence.

Mr Fitzgerald rejected suggestions he was prosecuting Mr Libby over technicalities, arguing that the damage caused by the disclosure of a CIA operative's identity "was done to all of us". The charges, he said referred to "very serious felonies".

"When citizens testify before grand juries they are required to tell the truth," he said. "Without the truth, our criminal justice system cannot serve our nation. The requirement to tell the truth applies equally to all citizens, including persons who hold high positions."

Mr Fitzgerald accused Mr Libby of "knowingly and corruptly" obstructing the grand jury and lying about "how and when in 2003 he learned and subsequently disclosed to reporters then-classified information" about the identity of a CIA covert agent, Valerie Plame.

The prosecutor described how Mr Libby had told FBI investigators and testified before a grand jury that he learned about Ms Plame's CIA status from reporters and had passed it on to other reporters on the assumption it was gossip. "It would be a compelling story to let the FBI go away, if only it were true. In fact, it was not true," Mr Fitzgerald said.

Mr Rove, who had also talked to journalists about Ms Plame in the summer of 2003, was not charged yesterday, but is clearly still under scrutiny. A third administration figure, mentioned in the indictment only as "official A", was also implicated in the leak.

Before leaving Washington at the weekend, Mr Bush reminded reporters: "We got a job to protect the American people, and that's what we'll continue working hard to do." But the extension of the inquiry will make it hard for the White House to salvage its legislative agenda.

© Guardian Newspapers Limited 2005

###