The publication of official figures putting the costs of Black Wednesday at £3.3 billion has prompted John Major to admit that he almost resigned when Sterling crashed out of the ERM.

After more than a week of controversy over the machinations surrounding the publication of the Treasury documents, they were finally released to the public on Wednesday evening.

Britain crashed out of the European Exchange Rate Mechanism on September 16, 1992 - a day of high drama which ruined the Conservative Party's reputation for economic competence.

The latest documents, released after a request from the Financial Times under the Freedom of Information Act, reveal that economic forecasts about the impact of the ERM were "spectacularly wrong".

Interest rates in the UK were repeatedly raised as the government sought to fend off speculators and keep the Pound trading within permitted limits against the Deutschmark.

In the event, massive waves of currency speculation forced the UK out of the ERM.

Difficult day

Major, who was prime minister at the time, told Channel 4 News that it was "a very unpleasant, very difficult, very painful day".

He said only "trenchant" arguments from Cabinet colleagues had prevented him from resigning.

The papers disclose, ironically, that it was Major who, when chancellor in late 1990, had pushed then prime minister Margaret Thatcher into joining the ERM against her better judgement.

Major had told her that interest rates could not be cut while Sterling remained outside the ERM.

"There seems no doubt that this was a powerful argument with the prime minister, who was clearly worried about the possibility of a weaker economic outturn than shown in the Treasury forecasts," said one of the documents.

In an analysis of the ERM policy written in 1994, a Treasury official wrote that the government had been "lulled into a false sense of security" by the early success of the policy.

"Having so convinced ourselves that ERM membership was a good thing, we found it difficult to contemplate (or plan for) the possibility of once again being outside it," he said.

"It is probably fair to say that we were so dead set on getting into the mechanism - after the frustrations of the previous five years - that we were more blinkered than we should have been about some of the risks."

Major added that the Act should be suspended during general election periods to avoid it being used for political ends.

'Football'

In an interview with the Telegraph on Thursday Lord Falconer, the constitutional affairs secretary, said he shared Major's concern that the Act is being used as a "political football" ahead of the election.

The Cabinet minister suggested that a new protocol be introduced relating to the release of documents on previous administrations.

He has written to Tory leader Michael Howard suggesting that former ministers are contacted as soon as a request is made, giving them five days to review the relevant documents and ask the attorney general to consider blocking their release.

Lord Falconer also proposed that a right of appeal would be granted if the attorney decided to turn down the request.

"I want people to see there's been a massive legal change since the introduction of the Freedom of Information Act. I do not want it to be a political football," he said.

"I do not want the fuss about the way the political parties are using it to obliterate what it's really about. We are seeing an absolute revolution occurring."

However he insisted that decisions about the Black Wednesday documents were "made by Treasury officials not ministers. You're seeing the legal regime playing out."

And he said it was legitimate for politicians to use the Act. "The purpose of the Act is to make information available, we are blind to what people's motives are," the lord chancellor said.

"What I am concerned about is that people should understand that there is a fundamentally new regime in place. We are not misusing the Act in government, the government is just complying with the law."

"It should be full freedom of information but full freedom of information means striking the balance between the space to formulate policy and releasing information to the public," he added.

A Conservative spokesman said the proposals would be considered "constructively". "We have been concerned that double standards have been operating and we want to see adequate safeguards put in place," the party said.

Procedural row

The release of the Treasury documents was preceded by a row over the handling and timing of their publication.

The publication of the documents was delayed to allow time for Major and former chancellor Lord Lamont, to study them.

Accusations of dirty tricks were levelled by both Labour and the Tories, with some reports saying the former ministers had blocked their release, while Major accused Alastair Campbell of being behind the request in order to make trouble during the general election campaign.

Neither charge turned out to be true, with Major stressing that he had "made no request whatsoever for any papers to be withheld".

"Indeed, I welcome the release of these papers in so far as they will correct the many misconceptions which surround this particular event, not least the wildly overstated costs of our exit to the taxpayer," he said.

In releasing the documents, the Treasury also confirmed that "neither Mr Major nor Lord Lamont have suggested any edits or deletions to any of the papers".

"Within government, officials only, and not ministers nor their political advisors, have seen the documents in advance of their release," added the department.

"The papers released today were, with one exception, written between 17 September 1992 and 10 January 1994.

"The final paper was written on 6 August 1997, but was circulated only to officials in the Treasury and, like all the other papers, has not at any time prior to release been seen by Labour government ministers or their special advisers."

The ministry added that the papers "were written with the aim of better understanding the events so that the Treasury as an institution could learn these lessons for the future".

Shadow chancellor Oliver Letwin, however, said it was doubtful that Labour had learned the lessons.

"The Labour Party, like the then Conservative government, supported ERM entry," he said.

"The Conservative Party has learned the lesson that Britain's economy is better off when we are in charge of our own interest rates and our own currency.

"The Labour Party haven't learned that lesson."