Andrea Leadsom, who is emerging as a challenger to Theresa May in the Conservative leadership election, sacrificed her chance of a place in David Cameron’s Cabinet on the day she told George Osborne he should say sorry, according to one of her backers.

Ms Leadsom, a junior energy minister, is said to have earned the Chancellor’s enmity four years ago when she was a member of Commons Treasury committee.

Mr Osborne was under fire because he had implied “people around Gordon Brown” had given Barclays bank the green light to manipulate its interbank lending rate at the height of the 2008 crisis. This was taken to be an attack on Ed Balls, who at the time was shadow Chancellor.

Download the new Independent Premium app Sharing the full story, not just the headlines

The manipulation of the so-called Libor rate blew up into a major banking scandal in 2012, but the suggestion that Ed Balls might be implicated was squashed when Paul Tucker, the Deputy Governor of the Bank of England, gave evidence to the Treasury committee.

Mr Osborne never apologised for his comments, although after hearing Mr Tucker’s evidence, Ms Leadsom said he should. She told the BBC: “Obviously he made a mistake and I think he should apologise.”

One of her supporters said: “She was someone of real principle, and she paid the price. She was stacks ahead of other people who were promoted to the Cabinet. She had 25 years of city experience and financial experience, and rose to be one of the top 120 people in banking. You don’t achieve that unless you are a really serious person. The only reason she wasn’t in the Cabinet was that she had offended George Osborne.”

Ms May, the Home Secretary, is so far ahead of all the other four contenders in the number of MPs who have declared their support for her that her place in the final two is a near certainty. Under Conservative Party rules, MPs whittle the list of would-be contenders down to two names in an exhaustive ballot. Party members then choose between the final two.

Ms May supported the Remain campaign during the referendum, so Brexit supporters say that her challenger ought to be an MP who supported Leave. Three former brexiteers, Michael Gove, Ms Leadsom and Liam Fox have entered the the race.

Answering questions from the Daily Telegraph, all five candidates have ruled out the idea of a second referendum, saying that the outcome was final. All say that they will seek to restrict immigration to Britain from the EU, and all have ruled out calling a snap general election.

The early signs are that Mr Fox is a long way behind the other two former Brexit supporters. Paul Goodman, a former Tory MP who edits the influential Conservative Home website, wrote that the momentum is with Ms Leadsom, whose campaign was boosted by support from former Work and Pensions Secretary Iain Duncan Smith. If that is correct, the UK will soon have its second woman Prime Minister.

Inside Politics newsletter The latest news on Brexit, politics and beyond direct to your inbox Enter your email address Continue Continue Please enter an email address Email address is invalid Fill out this field Email address is invalid Email already exists. Log in to update your newsletter preferences Register with your social account or click here to log in I would like to receive updates on politics every morning by email Update newsletter preferences

Shape Created with Sketch. The favourites in the Tory leadership race Show all 5 left Created with Sketch. right Created with Sketch. Shape Created with Sketch. The favourites in the Tory leadership race 1/5 Theresa May The longest-serving Home Secretary in 100 years took a back seat in the referendum campaign. While backing Remain, she did not hit the campaign trail and delivered only a handful of speeches and interviews, and was critical of many aspects of the EU, particularly the European Convention on Human Rights. Hedging her bets allows her to now emerge as a ‘unity’ candidate, and she is said to have been building up her back-room staff in preparation for a leadership bid. She has the significant advantage of having served in one of the great offices of state, in a steady and competent manner that has won her many admirers within party and the civil service. At a time of great instability, it may be that she is viewed as steady hand on the tiller. Mrs May does however, lack the ‘star quality’ of a Boris Johnson and party members may doubt her ability to connect with ordinary voters PA 2/5 Michael Gove The Justice Secretary may be able to set himself up as ‘the thinking Tory’s Brexit candidate’. Made an enormous political and personal decision to back Leave, taking on his old friend David Cameron. He performed well during the TV debates, and will be an admired figure among Eurosceptic Conservatives. Along with Johnson, he will be hindered by the fact that he led a very divisive campaign, characterised by ‘blue-on-blue’ action. MPs may also judge that he lacks Boris Johnson’s wider appeal with the electorate. Possibly more likely that he will settle for being his new bosom buddy Boris’s Chancellor Getty 3/5 Stephen Crabb Highly-rated Work and Pensions Secretary, raised on a council estate, so could reach out to non-traditional working class Tory voters Getty Images 4/5 Andrea Leadsom Minister of State for Energy at the Department of Energy and Climate Change is one of the most prominent figures in the Leave campaign, seen to have performed well in TV debates Rex Features 5/5 Liam Fox British Conservative MP and former Secretary of State for Defence, as sources said he will stand for the leadership of the Conservative Party AFP/Getty 1/5 Theresa May The longest-serving Home Secretary in 100 years took a back seat in the referendum campaign. While backing Remain, she did not hit the campaign trail and delivered only a handful of speeches and interviews, and was critical of many aspects of the EU, particularly the European Convention on Human Rights. Hedging her bets allows her to now emerge as a ‘unity’ candidate, and she is said to have been building up her back-room staff in preparation for a leadership bid. She has the significant advantage of having served in one of the great offices of state, in a steady and competent manner that has won her many admirers within party and the civil service. At a time of great instability, it may be that she is viewed as steady hand on the tiller. Mrs May does however, lack the ‘star quality’ of a Boris Johnson and party members may doubt her ability to connect with ordinary voters PA 2/5 Michael Gove The Justice Secretary may be able to set himself up as ‘the thinking Tory’s Brexit candidate’. Made an enormous political and personal decision to back Leave, taking on his old friend David Cameron. He performed well during the TV debates, and will be an admired figure among Eurosceptic Conservatives. Along with Johnson, he will be hindered by the fact that he led a very divisive campaign, characterised by ‘blue-on-blue’ action. MPs may also judge that he lacks Boris Johnson’s wider appeal with the electorate. Possibly more likely that he will settle for being his new bosom buddy Boris’s Chancellor Getty 3/5 Stephen Crabb Highly-rated Work and Pensions Secretary, raised on a council estate, so could reach out to non-traditional working class Tory voters Getty Images 4/5 Andrea Leadsom Minister of State for Energy at the Department of Energy and Climate Change is one of the most prominent figures in the Leave campaign, seen to have performed well in TV debates Rex Features 5/5 Liam Fox British Conservative MP and former Secretary of State for Defence, as sources said he will stand for the leadership of the Conservative Party AFP/Getty

Another Leadsom backer, the senior Tory MP Bernard Jenkin, said: “She has steel, grit and self-possession, and commands the room. She doesn’t let herself be pushed around and made to say things she will later regret.”

A spokesman for her rival, Mr Gove, admitted that the “unconventional” circumstances of his entry into the race meant that he was off to a slow start. Mr Gove has often declared that he had no wish to be Prime Minister and was expected to back Boris Johnson until he unexpectedly announced that he did not think Mr Johnson had the steadiness of character to be prime minister.

His spokesman added: “He has got more experience than Andrea, and people will want that experience. We’re ahead of her, and there will be more people coming for Michael in the next few days. I’m confident he will be in the final two.”

Mr Osborne’s spokesman denied that he had prevented Ms Leadsom being promoted to the Cabinet, saying: “I don't recognise that at all.”