Former Barclays chief executive Bob Diamond gives evidence on the Libor rate-fixing scandal to MPs on the Treasury select committee ITN

The ousted Barclays chief executive Bob Diamond is facing fresh pressure after the chairman of the House of Commons Treasury select committee described some of his evidence to MPs yesterday as "implausible", as the row grew over who was at the heart of manipulation of interest rates during the credit crisis.

Andrew Tyrie, who could take charge of a parliamentary inquiry into Britain's banking industry if MPs can reach agreement today, ratcheted up the pressure on Diamond by writing to Barclays over some of his evidence.

Hours after Diamond denounced the behaviour of some of his staff as "reprehensible", Tyrie said he would be asking Barclays for correspondence from the Financial Services Authority about its assessment of Diamond.

Tyrie said: "I think, cumulatively, the whole package looks somewhat implausible."

During a three-hour grilling by MPs yesterday Diamond told the treasury select committee of his disgust when he learned that traders at Barclays had manipulated interest rates in 2005. "When I read the emails from those traders I got physically ill. It is reprehensible behaviour and if you are asking me should those actions be dealt with – absolutely."

Asked by the Conservative MP David Ruffley when he learnt of the practice of rate rigging – known as low balling – Diamond indicated that he only learnt about it when he was shown the FSA report a few days before its publication. "The finding of the investigation, other than the things I learnt as a witness, came to me four or five days before they were published."

Tyrie is concerned that Diamond said he was not aware of the manipulation of the Libor interest rate by Barclays traders between 2005 and 2009.

Tyrie asked Diamond whether it was true that the FSA had raised questions about his initial appointment as chief executive of Barclays in the autumn of 2010. Tyrie said he had also been told that the FSA had raised a number of concerns about the bank at a Barclays board meeting in February, which FSA officials attended.

A Barclays source said the allegation made by Tyrie about the FSA was selective leaking of highly confidential documents, which misrepresented the meeting.

As the pressure on Diamond was renewed yesterday, Chancellor George Osborne ramped up hostilities with Labour over Britain's banking culture, accusing Ed Balls and other Labour former ministers of being "clearly involved" in intervening over the Libor rate.

The carefully-staged intervention by Osborne, immediately dismissed by Balls's team as "desperate" and "frenzied", was designed to intensify the pressure on Labour as Ed Miliband tries to establish a judge-led inquiry into the banking scandal.

The Labour leader, who clashed with David Cameron in the Commons on Wednesday on the best way to investigate the manipulation of interest rates at Barclays, will table a motion calling for a time-limited inquiry along similar lines to the Leveson inquiry into press ethics.

If Miliband's proposal is rejected by MPs, it is expected that Labour will not block the prime minister's plan for a parliamentary inquiry to be chaired by Tyrie. However, Tyrie has said that he will not preside over an inquiry that is not backed by all three parties.

If Tyrie feels unable to chair the inquiry, Downing Street is expected to say that the Treasury select committee should simply continue its work. Labour is likely to deflect criticism of a climbdown by arguing that the prime minister, who had initially rejected an inquiry, has changed tack as the scale of the Barclays scandal has unfolded.

Tyrie moved to show his independence by criticising Diamond last night. He told the BBC: "We learnt that Bob Diamond says he didn't know anything about this until about month ago which I find rather surprising. We also learnt his Chief Operating Officer received a memo from his boss and asked him to fiddle the Libor rate and it didn't cross his mind that it might be a good idea to check out whether that's really what Bob Diamond meant him to say, and to act on, which of course Bob Diamond now says that was not the case."

A record £290m fine was levied on Barclays for attempting to manipulate the interest-rate benchmarks, supposedly based on the rates at which banks lend to one another – the London interbank offered rate (Libor) and its European equivalent, Euribor, between 2005 and 2009.

There were two significant findings – that Barclays traders did favours for colleagues ("submitters") to submit higher or lower rates to the Libor panel to help generate profits; and that during the 2008 banking crisis they reduced submissions to avoid any suggestion that the bank was in financial difficulty.

Barclays had raised the stakes on the eve of Diamond's evidence by releasing an internal note by its former chief executive. Diamond's note of a private conversation with the Bank of England deputy governor, Paul Tucker, suggested that Whitehall figures at the time of the last government may have encouraged Barclays to intervene on the Libor rate during October 2008.

Labour dismissed such suggestions out of hand. The shadow Treasury minister Chris Leslie said: "This is desperate stuff from George Osborne – lashing out in a frenzied way that demeans the office of the chancellor of the exchequer. It's now increasingly clear that he isn't interested in getting to the truth, only in playing party politics and throwing around false allegations with no evidence.

"This is why we need an independent, forensic, public and judge-led inquiry that can rise above party politics. David Cameron and George Osborne need to explain why they have spent the last week desperately trying to resist one."