Prime Minister Jean Chretien says he refuses to accept the resignation of his communications director, Francoise Ducros, over reports she told reporters she thought U.S. President George Bush was a "moron."

Chretien announced the decision at a news conference Friday in Prague, where he is attending a NATO summit with Ducros. The PM said Ducros apologized to him for the furor.

"She was graceful enough to offer me her resignation," the prime minister said. "I have not accepted that."

In her letter of resignation to the prime minister, Ducros insisted she did not insult the American president.

"I have never, in any of the many briefings I have given reporters as the Prime Minister's chief spokesperson, ever expressed, on the record or off the record, any negative opinion concerning President George Bush," the letter reads.

"If I made comments in the context of what I understood to be a private conversation, I regret that they have attracted so much media attention. I accept full responsibility for them and I sincerely apologize."

Ducros reportedly uttered the insult about Bush to reporters at the NATO summit Wednesday, in reference to Bush's attempts to use the summit to push his agenda about disarming Iraq.

CTV's Ottawa Bureau Chief Craig Oliver said the remark was made in a conversation with a reporter in a media room. National Post journalist Robert Fife, who first reported the comment, called the meeting a "briefing." Oliver says the scandal is a serious incident.

"It simply does not get more serious," Oliver says. "This woman is the voice of the Canadian government, and she has mortally insulted the leader of the free world, and she has perhaps provided comfort to the enemies of the U.S."

He says Ducros has been keeping a conspicuously low profile since the story broke and has been described as looking "ashen."

"But she, for the moment at least, has survived. It will not depend on how quickly the furor dies. But most of all it will depend on whether the White House or Mr. Bush show any anger as a result," Oliver commented to CTV Newsnet.

World press jump on story

Ducros' comment became fodder for the international press, bored with covering the dry NATO summit. The Canadian embarrassment presented a chance to liven up their coverage with old-fashioned political blundering.

"Obviously not a particularly bright move, but what strikes me is that the prime minister seems to have compounded this by using the word -- up till that point only reported in print -- on camera," said the BBC's Paul Adams, referring to Chretien's attempts to douse the controversy Thursday before a room full of reporters and cameras.

In the process the PM repeated the "moron" comment.

"He's not a moron at all, he's a friend. My personal relations with the president are extremely good," said Chretien.

A top American correspondent wondered if the view of the prime minister's spokesperson represented broad-based Canadian opinion.

"The issue it seems to me is to what extent is (Ducros) reflecting Canadian policy, to what extent is this a professional act on a part of spokesperson for the prime minister?" asked James Graff of Time magazine.

There has been no direct comment from Bush but sources said he was aware his competence in office had been questioned by the spokesperson for the Canadian government.

Earlier, White House spokesperson Ari Fleischer had said it's clear the comment was not the official position of the Canadian government. "I just dismiss it as from somebody who obviously doesn't speak for the Canadian government," Fleischer said Thursday.

Opposition rails against remark

Opposition MPs are furious with Ducros' remark and want Chretien to fire her.

"Trained diplomats lose their positions. Elected members of Parliament lose their positions -- Francie Ducros keeps hers. Where's the logic in that?" wondered Tory leader Joe Clark.

"Jean Chretien is keeping her there because of a double standard that is undermining the government," Clark added in comments to reporters Friday.

"It's totally irresponsible for the top spokesperson for the government of Canada to go overseas to a head of state meeting and launch an 'ad hominem' attack against the head of our major ally and at the same time, expecting us to be improving American relations," remarked Canadian Alliance MP Jason Kenney Friday.

Foreign Affairs Minister Bill Graham said the remark won't sour Canada-U.S. diplomacy. "I'm totally confident that Canada-U.S. relations are on a good footing," Graham said Friday. "Whatever incidents that might occur, and there will always be some... these are difficult issues, we raise them, we discuss them, and we deal with them as friends."

Even some Liberal MPs have sided with the Opposition, saying if Ducros did make the comment it should be investigated.

"If such a thing was said by a person in a position of responsibility, it's completely unacceptable," said Industry Minister Allan Rock Thursday.

"We have a valued relationship with the United States, this is a sensitive time," he said. "We should be emphasizing how much we value that relationship and we should be very careful at this very sensitive time."

"Moron" is actually not the first insult to be exchanged between Canada and the U.S. with regards to their respective leaders. CTV's Oliver reports that White House officials used to call the 68-year-old Chretien "dino" -- short for dinosaur.

With a report from The Canadian Press.