Bank of England deputy governor Paul Tucker has told MPs (BSE: MPSLTD.BO - news) he "absolutely" refuted claims he attempted to influence Barclays (LSE: BARC.L - news) into manipulating the Libor rate.
Speaking before the Treasury Select Committee, Mr Tucker said that a record of a phonecall he had with former Barclays chief executive Bob Diamond about lending rates gave the "wrong impression".
The deputy governor found himself in the spotlight after Mr Diamond released the note, in which it has been suggested Mr Tucker was encouraging the bank to submit lower Libor submissions in light of concerns from senior Whitehall figures.
Mr Tucker confirmed one of the Whitehall figures was the-then Downing Street chief of staff Sir Jeremy Heywood but denied he had attempted to influence Barclays into rigging rates.
Mr Tucker said that the senior Whitehall figures whom he spoke to about Libor included Sir Jeremy, his predecessor as Number 10 chief of staff Tom Scholar, then Downing Street adviser Sir Jon Cunliffe and Treasury permanent secretary Sir Nicholas Macpherson.
But he denied "absolutely" that any Whitehall officials or Government ministers - including Ed Balls and Baroness Vadera - ever encouraged him to "lean on" Barclays or any other bank to lower its Libor submissions.
Emails from Mr Tucker to Mr Diamond, obtained by Sky News ahead of the hearing, show he sought urgent clarification about sources of the bank's funding during the 2008 banking crisis.
Barclays has been the focal point for a row over banking culture after the bank was fined £290m by UK and US regulators for manipulating the Libor, which affects mortgages and loans.
Mr Tucker's appearance follows hours after Labour leader Ed Miliband outlined plans for reform of the banking sector in the wake of the scandal.
The deputy governor was dragged into the affair by Mr Diamond, who disclosed a note of a conversation the two had in October 2008.
He said that at the time, there was concern that Barclays was "next in line" to collapse and require taxpayer assistance after Royal Bank of Scotland (LSE: RBS.L - news) and Lloyds Banking Group (LSE: LLOY.L - news) .
However, he added: "We were not in the position of thinking Barclays was doomed. Had we thought that, the Bank would have given strong advice to the Government that it was not safe."
Mr Diamond told the committee last week that Mr Tucker had relayed concerns from senior Whitehall figures, who he took to be government officials, that Barclays' Libor rate was too high.
The disclosure prompted a row between the coalition Government and Labour after Chancellor George Osborne claimed Ed Balls had been involved in the manipulation.
Mr Diamond told MPs that he interpreted the comments to mean that Barclays' Libor could be lower, although he said he did not feel they were "an instruction".
However, the bank chief's account of the conversation ultimately led to the-then president of investment banking arm Barclays Capital Jerry del Missier telling staff to submit a lower rate.
Mr Diamond and Mr del Missier have both resigned with immediate effect following the revelations, which has seen £3.7bn wiped off the bank's market value.
Chairman Marcus Agius, who has also announced his intention to step down but is remaining in his post until Mr Diamond's successor is found, is to give evidence to MPs on Tuesday.
The Serious Fraud Office has now launched a criminal investigation into the manipulation and MPs are to hold a parliamentary inquiry into the affair.
Meanwhile, pressure continues to build on Mr Diamond to waive at least part of an estimated £17m golden parachute deal.
Business Secretary Vince Cable said on Sunday: "I think in view of what's happened, I would sincerely hope that the board of Barclays take a fairly strict view about this."
"There isn't anything that the Government can do about it but I think in view of the shame that has been heaped on Barclays bank (NYSE: BCS-PA - news) , I would be very, very surprised if the chairman and the board were to allow another outrage to occur."