At the eleventh hour, Tower Hamlets has drawn back from an act of stupidity stunning even by its own standards. The council’s initial response to our revelations that it has been infiltrated by Islamic fundamentalists – revelations which the council leader refuses to deny – has been not to investigate the matter, but to attack one of the people who helped expose it.

In the ongoing takeover process of the council by the Islamic Forum of Europe (IFE), one of the key moments was the appointment of Lutfur Ali, a man with close links to the IFE, to the second most important job at the Town Hall – despite his palpable unfitness for the £125,000 post.

Apart from his IFE links, there wasn’t that much else going for Mr Ali. The council-appointed headhunters who considered applicants described him as “rather limited,” “superficial,” and “one-dimensional” and said he might “struggle with the intellectual challenges [of] a highly strategic role.” And the headhunters didn’t even know that Mr Ali had submitted a misleading CV, which gave false dates for a previous employment and omitted the fact that he had been forced to resign from that job for breaching the local authority code of conduct.

Mr Ali is responsible for council grants. Since his appointment, a lot more council money has started going to organisations closely linked to  – you guessed – the IFE. These organisations include a very generously-funded youth training project, Brick Lane Youth Development Association, or Blyda. Part of the purpose of this project, according to critics, is to take vulnerable young people off the streets and imbue them with the values of the IFE.

Blyda’s chair and three of its four trustees are also trustees of the IFE, or its youth wing, the YMO. The man in charge of Blyda’s project working with local gang members, Muhammad Rabbani, is the same person who trains young IFE recruits in the need for an “Islamic social, economic and political order” in Britain.

Has the council sacked or suspended Lutfur Ali? Not at all, but they have been trying to suspend the man who exposed him – the opposition leader, Peter Golds, who brought out the contents of the headhunters’ report in our programme. Mr Golds was accused of “breaching confidentiality” by quoting from the document. Actually, he was quoting not from the report but from a letter he wrote about it to the council’s standards committee.

The idea that someone can be thrown off a council for reading out one of his own letters has proved, in the end, a notch too far even for Tower Hamlets. It would also have been the mother of all media disasters. So this afternoon the idea has been dropped.

But it is symptomatic of the utter panic and denial now reigning at the council that they could even have thought of such a thing.