This was a panic waiting to happen. As the media redirect their sights after feeding off the Black Rod frenzy for a week, the soul-searching in Downing Street is fraught. What now bothers the people inside the bunker is not the rights and wrongs of the original story, but how they allowed themselves to be devoured by it.

"We've stared into the abyss and it's truly frightening," as one senior official put it to me. "If we panic about this kind of thing, how on earth are we going to cope when the going really does get rough?"

And the answer is that they don't know - except to promise us and themselves that, this time, they really do mean it: they really will stop spinning.

There is a new mood of fatalism at No 10. And a collective loss of nerve. Although the alarm was at its greatest during the fuel protests of two years ago, the frustration and perception of powerlessness of the past week is, according to one official, "unlike anything we have been through".

A number of prominent people want out. Several of those who moved on after the last election are mightily relieved that they did. The Blairite apparatchiks are now convinced that, whatever they do, they will be damned in the media. They also suspect that a telephone call to any public body, discussing the logistical arrangements for a prime ministerial visit, is liable to be interpreted as "muscling in".

"When we open our mouths, they think we're lying. When we say nothing, they think we're hiding something," said a member of the entourage. The more candid among them admit the problem is largely of their own making. "In our first term, the press we received was better than the reality. Now it's worse."

Alastair Campbell has been the object of the attacks, but the orders came from the very top.

It was Tony Blair who reacted badly to the suggestion that he wanted to muscle in on the late Queen Mum's ceremonials. And it was TB, according to sources inside the building, who personally insisted on going to the Press Complaints Commission.

There is one vision that alarms Blair's minions. It is the memory of John Major, in his living-room at his home in Huntingdon one Saturday afternoon in the early 1990s, staring forlornly at the television set and complaining about a headline on Ceefax. They want to prevent Blair from going down the same route.

"This is a time for some people to show they're made of stronger stuff," said one minister pointedly of the boss.

Toughness is the new test of this febrile political moment. The man who would be king, Gordon Brown, is showing it (compounding the suspicions of the Blairites). David Blunkett, for all his many policy difficulties, has always shown it. Alistair Darling was brought in to Transport to show it. Alan Milburn is learning it.

The outer reaches of Whitehall, the more remote departments, seem oases of calm compared to the atmosphere on the bridge. The likes of John Reid, Margaret Beckett and the unsung Michael Meacher are demonstrating that they're getting on quietly with the job.

It is the Blairites who indulge in the histrionics and the neuroses. "The people who liked to portray themselves as the problem solvers, we now see, were problem creators all along," said one minister about his colleagues at No 10.

Far from bringing greater cohesion to government, the centralisation of power into Downing Street has brought a greater emotional fragility. The situation will require nerves of steel. But has Downing Street got what it takes? And is that all that's needed?

A number of senior MPs are urging the Prime Minister to turn defence into attack, not with more hectoring of the press, but in policy terms. They want him to throw out the "warm soapy water" (as William Hague described it, referring to Blair's first five years) in which the government tried to wash the political process. But they are not holding their breath that the big tent will be deflated and that the political lines of engagement will sharpen.

Blair's own exhortation to his party two years ago to beware the "forces of conservatism" was one of his characteristic flourishes that sounded so strong at the time, but added up to so little. Now, at least, he knows there is an enemy. But this is asymmetric warfare. The opposing army, the Conservative Party, is nowhere to be seen. It is, No 10 believes, hiding behind proxies, especially in the media. Blair's team fears that the same methods of journalism motivated by political purpose, which nearly did for Bill Clinton, are being honed for the fight against Blair.

What really bothers his team is that, having fired so many rounds to so little effect, the only bullets they've got left in their armoury are blanks.