Just this morning, Mr Howard denied cutting a deal in 1994 to hand the leadership to Mr Costello.
But this afternoon Mr Costello emerged, in a brief press conference, to confirm former defence minister Ian McLachlan’s account of a meeting 12 years ago, in which allegedly Mr Howard offered to hand over the leadership midway through a second term of government.
Mr Costello said Mr Howard made the offer spontaneously during a meeting on December 5, 1994, when the Liberals were in opposition. “He told me that he intended to do one-and-a-half terms as prime minister and then would hand over,” Mr Costello told reporters in Melbourne.
“I did not seek that undertaking, he volunteered it and I took him at his word. Obviously that did not happen.”
Mr Costello said during the meeting, which was witnessed by Mr McLachlan, Mr Howard had asked him not to stand for the Liberal Party leadership “because he did not want a vote in the party room”.
Mr McLachlan, who took notes of the meeting, had said that Mr Howard told Mr Costello he only wanted to be prime minister for two terms before standing aside for his treasurer. He says the deal was struck amid manoeuvring to replace then-Liberal leader, and current foreign affairs minister, Alexander Downer.
Two years later and with Mr Howard in the top job, the coalition won the election and took government.
Mr Costello also said he had not encouraged Mr McLachlan to make any revelations about the 1994 meeting. “But his account is entirely accurate,” he said.
“That was precisely what happened. They are the full facts of what happened. “I have a very clear recollection of the events. You can interpret them as you like but that is the full truth of what happened.”
But when asked by a journalist, Mr Costello stopped short of calling Mr Howard a liar, saying, “Look, I’m telling you what happened. I’m not making any allegations against anybody, I’m telling you what happened and, look, you can interpret whatever you like.”
The prime minister has clearly denied ever striking such a deal, telling reporters earlier “There was no deal made.”
But he has replied to this development, through a spokesman, saying there is no contradiction between the statements, but Mr Howard did not dispute Mr Costello’s claim.
“Nothing said by Mr Costello today has in any way altered the position that no deal was made about a leadership transition,” Mr Howard’s spokesman said.
“This is the position that Mr Costello and I have always maintained.”