Education Secretary Michael Gove has been forced to apologise, while Theresa May's special adviser has quit in the public feud over the handling of alleged extremism in schools.
Mrs May's aide Fiona Cunningham resigned following the investigation ordered by Prime Minister David Cameron into the dispute between two of his most senior ministers.
And Mr Gove has written to apologise to Charles Farr, the director general of the Office for Security and Counter-Terrorism, and the Prime Minister "in acknowledgement of his role" in the row, which saw the Education Secretary's camp and Mrs May's side at loggerheads.
Fiona Cunningham has resigned after an investigation into the row The rift became public after quotes attributed to a Department for Education source in The Times detailed Mr Gove's concerns about the Home Office's approach to tackling extremism.
In response, a letter was released from the Home Secretary to the Education Secretary which questioned his department's handling of the Islamist "Trojan horse" allegations in Birmingham schools, despite warnings dating back to 2010.
A source said: "Why is the DfE wanting to blame other people for information they had in 2010? Lord knows what more they have overlooked on the subject of the protection of kids in state schools? It scares me."
Mr Cameron was said to be "deeply frustrated" at the dispute, particularly the way it broke on the day of the Queen's Speech.
A Downing Street spokesman said: "In relation to unauthorised comments to the media about the Government's approach to tackling extremism and the improper release of correspondence between Ministers, the Prime Minister has received the Cabinet Secretary's review establishing the facts behind these events.
"In acknowledgement of his role, today, the Secretary of State for Education has written separately to Charles Farr and the Prime Minister apologising for the original comments made to the Times newspaper.
"In addition, in relation to further comments to the Times, Fiona Cunningham has today resigned."
Some 21 schools in Birmingham have been the subject of an Ofsted investigation after a letter referred to an alleged plot by hardline Muslims to seize control of governing boards in the city.
Ofsted will publish the findings of its investigation on Monday, with one of the schools expected to be found as "inadequate", with its management strongly criticised by inspectors.
Mr Gove is also to make a statement in the Commons, where he is set to face some uncomfortable questions from Labour which has seized on the spat, and accused the Government of "gross negligence" for failing to tackle the issue of extremism in schools.
Shadow education secretary Tristram Hunt said: "Michael Gove should be apologising to pupils and parents, not David Cameron. He was warned of the problems in Birmingham four years ago.
"Michael Gove can no longer seek to distance himself from the mess that he has created. He must explain in full what he knew about the warnings he was given in 2010."
Ahead of his apology, Mr Gove had earlier denied the row with Mrs May had damaged the Government, or that he was considering his position over his department's handling of the Birmingham allegations.
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