Downing Street officials suspected Andrew Mitchell's plebgate downfall could have been the result of a "gigantic conspiracy", Jeremy Heywood has said.
The Cabinet secretary told a committee of MPs No 10 was deeply suspicious of the police's account of events but decided to "stick by Andrew Mitchell, keep him in post and move on".
Public anger over allegations that Mitchell called police officers on the Downing Street gate "f***ing plebs" eventually forced the minister's resignation.
But CCTV footage casting doubt on the police's account of events and an email from an apparent member of the public who may have been a police officer sent the plebgate scandal into reverse before Christmas.
Conservative MP Charlie Elphicke, a member of the Commons' public administration select committee, asked Heywood: "Was what actually happened that it just did not occur to anyone that it could be possible that it could be a massive fabrication?"
Heywood replied: "We accepted there were unanswered questions including the possibility of a gigantic conspiracy, or a small conspiracy, but we decided on balance to let matters rest as they were," he said.
Committee chair Bernard Jenkin attacked the prime minister's decision to appoint Heywood in charge of an internal inquiry looking at the veracity of the email.
"You were just the wrong figure to be conducting such an investigation," he told Heywood.
The Cabinet secretary said his inquiry, which Downing Street claimed at the time was sufficient, was just a "little review".
"I don't have the powers, I don't have the time," he said.
Tory allies of Mitchell in parliament are now agitating to clear the ex-international development secretary's name. A Metropolitan police investigation overseen by the Independent Police Complaints Commission is now underway.
"Clearly there are a number of very serious unanswered questions here, not least the allegations that there have been about the leaking of No 10 police logs to the media and continuing allegations that the logs were falsified in some way," Heywood told MPs.
"These are very serious allegations. It is very, very important that the people guarding 10 Downing Street are people of integrity. If it is proven in a court of law — if it gets to that — that someone has tried to falsify evidence to bring down a Cabinet minister, that is a very fundamental issue, so I think it would be wrong to rush to judgment now."