Mr Dalrymple was sacked last week by the city authority from his pound;90,000 a year post as strategic projects manager. He was removed within two days of a high-level complaint from building giant Balfour Beatty. It claims that it received confidential information through a consultant about the bidding process for the latest public private partnership (PPP) tender.

The ADES chief was identified as the source and immediately dismissed for gross misconduct. He is now set to lose his position as ADES chief administrator.

Balfour Beatty, through its consortium Transform, had been vying with Axiom Education for the second phase of the city’s rebuilding programme, involving two primaries and six secondaries. The preferred bidder was due to be announced over the next few weeks but Balfour Beatty has now withdrawn, costing the council at least a year’s delay and several million pounds in costs.

Mr Dalrymple, formerly depute director of education, was moved sideways earlier this year when the education department was rebranded as a children and families department. He has since been involved in restructuring plans.

Fraud officers were called in once Balfour Beatty directors admitted they had access to privileged information. Lothian and Borders Police confirmed it had received a complaint and was investigating.

Inquiries could take several weeks.

Mr Dalrymple was described as “one rogue employee” by Donald Anderson, the city’s leader. The council is convinced its misfortune could have happened under any rebuilding scheme, and not just through the PPP initiative.

Ironically, another of the key officials involved is Roy Jobson, Edinburgh’s director of children and families, who is this year’s ADES president. Mr Jobson said: “I will be writing to the ADES executive members putting forward the proposal that we now seek nominations for a new general secretary.”

Mr Dalrymple had been in the post for almost two years.