A Brexit minister has apologised in Parliament for comments he made about the independence of the civil service.
Steve Baker said he had been told Treasury officials were deliberately trying to influence policy in favour of staying in the EU customs union.
Charles Grant, an EU policy expert said to have been the source of the claims, has since denied telling Mr Baker this.
Mr Baker told MPs he now accepted this and insisted that he had the "highest regard" for the civil service.
In a short speech in the Commons before proceedings began on Friday, Mr Baker said he wanted to set the record straight.
"As I explained yesterday (Thursday) I considered what I understood to be the suggestion being put to me as implausible because of the long standing and well regarded impartiality of the civil service," he said.
After Mr Baker's claims emerged on Thursday, Mr Grant, the Centre for European Reform think tank chief, issued a statement.
'Honest and trustworthy'
He said he recalled telling the minister at an event at the Conservative Party conference that he was aware of Treasury research showing the economic costs of leaving the customs union outweighed the benefits of striking free trade deals.
But he added: "I did not say or imply that the Treasury had deliberately developed a model to show that all non-customs union options were bad, with the intention to influence policy."
An audio recording of Mr Grant's lunch at the Tory conference has since been published online.
In his apology, Mr Baker said: "In the context of that audio I accept that I should have corrected or dismissed the premise of my Hon Friend's question.
"I have apologised to Charles Grant who is an honest and trustworthy man.
"As I have put on record many times I have the highest regard for our hard-working civil servants. I am grateful for this early opportunity to correct the record, and I apologise to the House."
1/3 This morning in Parliament, I answered a question based on my honest recollection of a conversation. As I said, I considered what I had understood to be implausible, because of the impartiality of the civil service.— Steve Baker MP (@SteveBakerHW) February 1, 2018
Downing Street said it was "the right thing to do" for Mr Baker to have made a "heartfelt" apology for his comments, adding: "We consider this matter closed."
Theresa May's spokesman said the prime minister had not personally spoken to Mr Baker about the row but No 10 officials did have a word with him after the recording of Mr Grant's lunch emerged.
The row was sparked by Commons exchanges on Thursday at Brexit questions.
Prominent Brexiteer Jacob Rees-Mogg asked Mr Baker to confirm if he had heard Mr Grant that "officials in the Treasury have deliberately developed a model to show that all options other than staying in the customs union were bad and that officials intended to use this to influence policy".
In response, Mr Baker said he was "sorry to say" that Mr Rees-Mogg's account was "essentially correct", adding: "At the time I considered it implausible because my direct experience is that civil servants are extraordinarily careful to uphold the impartiality of the civil service."
Mr Baker, a leading backbench Eurosceptic before his promotion to a ministerial post, was challenged by opposition MPs as he delivered his answer to Mr Rees-Mogg, prompting him to add: "I didn't say it was correct. I said the account that was put to me is correct.
"It was put to me, I considered it an extraordinary allegation, I still consider it an extraordinary allegation."
Following Mr Baker's apology, Mr Rees-Mogg is continuing to insist that the Treasury has questions to answer over its stance on the customs union.
3/5 When Mr. Grant refers to ‘unpublished papers’ on the Customs Union, who commissioned these and authorised him to be told? Again, if officials, improper for them to tell a partisan think-tank leader before most of the Government or Parliament #TreasuryGate— Jacob Rees-Mogg (@Jacob_Rees_Mogg) February 2, 2018
Theresa May has ruled out staying in the customs union - which allows tariff-free trade between its members but prevents them from negotiating their own trade deals - but has not excluded the possibility of some form of customs partnership with the EU after Brexit.