London — The government of Prime Minister Margaret Thatcher, caught off guard by the ferocity of reactions to Defense Minister Michael Heseltine's dramatic resignation last week, is struggling to regain its composure after further embarrassing disclosures yesterday. The disclosures have proved damaging to Trade and Industry Secretary Leon Brittan, and have aroused intense speculation that he may have to go.
Downing Street, which admits that the government ``is in disarray'' over the Heseltine affair, is still pledging its full support for the beleaguered Mr. Brittan, who has been accused by Mr. Hesel-tine of using his influence against the European consortium in the Westland helicopter controversy. Both a European consortium and a group led by Sikorsky, an American company, are vying for a minority stake in the financial rescue of the ailing helicopter company.
When asked if Mr. Brittan would stay, a Downing Street source retorted, ``Why should he not?''
But several Conservative members of Parliament are not so sure that he can survive, following the disclosure yesterday of diametrically opposite versions of what happened in a crucial Jan. 8 meeting between Brittan and Sir Raymond Lygo, chief executive of British Aerospace, a major participant in the European consortium.
That meeting was central to Heseltine's charge that, far from being neutral in the Westland affair, Brittan had used the meeting to tell Sir Raymond that the role British Aerospace was playing in the consortium was ``against the national interest.'' The Thatcher government had proclaimed its neutrality in the Westland affair.
Now a ``private and strictly confidential'' letter to Mrs. Thatcher from Sir Austin Pearce, chairman of British Aerospace, has lent credence to Heseltine's accusation. The letter, made public yesterday, says that Brittan had stated ``that what we were doing was not in the national interest'' and ``that we should withdraw.''
Government statements give a totally divergent version. They say that no pressure was brought to bear on British Aerospace to withdraw and that what Brittan had said was that it was the ``continuing uncertainty over Westland'' -- not British Aerospace involvement -- that was not in accord with national interest.
The conflicting versions have fueled the continuing debate over who, in fact, is telling the truth.
In an attack on Prime Minister Thatcher in a stormy parliamentary debate yesterday, Labour leader Neil Kinnock wanted to know why Sir Raymond should want to fabricate his account, implying that Brittan was not telling the truth. But in her response, Thatcher supported Brittan, saying she regretted that there were different recollections of the meeting.
The crisis has raised questions about Brittan's credibility and Prime Minister Thatcher's judgment and authority.
At the same time, many parliamentarians are wary of Heseltine, whom they feel is waging a personal crusade and has become emotionally obsessed with his cause.
A Downing Street source gives Heseltine credit for the ``excellent job'' he did in handling the politically sensitive nuclear weapons controversy in 1984, but claims that Heseltine is now ``restive, gives the impression he knows how to run Britain better than anyone else, and has got frustrated.''
Prime Minister Thatcher, during the House of Commons debate, took a swipe at Heseltine when she said he ``accepts the principle of collective responsibility [within the Cabinet] without accepting the disciplines that went with it.''
The difficulty for the government is that the focus on Heseltine has shifted to Brittan. Although a brilliant barrister, Brittan is regarded as being out-maneuvered by the more politically adept Heseltine.
Brittan opened himself to charges that he had misled the House of Commons when he first denied awareness of Sir Austin Pearce's letter and then subsequently retracted his statement. It is that letter that puts Aerospace's version of the Jan. 8 meeting at sharp variance with that offered by government officials.
While government sources go no further than conceding that the two accounts are at variance, they do strongly defend Brittan's conflicting statements on the receipt of Sir Austin's letter, on the basis that he was protecting the requested confidentiality of the correspondence.
The opposition is concentrating much of its fire on Brittan in the hope that he will be identified in the public mind with Mrs. Thatcher. In the Commons debate on the controversy, Labour leader Kinnock wanted to know if Brittan is ``victim, agent, or acting on his own?''