By Guy Faulconbridge and Kate Holton
LONDON, June 11 (Reuters) - Former British Prime Minister Gordon Brown accused media tycoon Rupert Murdoch on Monday of misleading a government-sponsored inquiry into press ethics with incorrect testimony alleging Brown had threatened war against Murdoch's company.
"This conversation never took place. I am shocked and surprised that it should be suggested," Brown told the Leveson inquiry. "This call did not happen. The threat was not made."
"I find it shocking," Brown said."This did not happen. There is no evidence that it happened other than Mr Murdoch's but it didn't happen."
Murdoch had told the inquiry under oath that Brown phoned him in September 2009 after the Sun newspaper started supporting the Conservative Party. Brown vowed to wage war on Murdoch's company in revenge, he testified.
"We were talking more quietly than you or I are now - he said, 'Well, your company has declared war on my government and we have no alternative but to make war on your company,'" Murdoch told the inquiry in April.
When pressed on how a serving prime minister could make such a threat, Murdoch told the inquiry: "I don't think he was in a very balanced state of mind".
Brown, who served as prime minister from 2007 to 2010, said that Murdoch was wrong about both the date and the contents of the phone call.
Statements submitted to a media watchdog by five of Brown's advisers, and seen by Reuters, show none of the five heard Brown threaten Murdoch on the call.
Aides to Brown, including his special adviser, director of strategy and deputy chief of staff, said in statements submitted to the Press Complaints Commission last year that Brown made no such threat on the call, which took place in November not September as Murdoch had said.
"I listened to the phone call between Mr Brown and Mr. Murdoch in November 2009," Stewart Wood, special adviser to the Prime Minister's office, said in a statement dated October 2011 that Reuters has seen.
"At no point in the conversation was threatening language of any sort used by either Mr Brown or Mr Murdoch," Wood said.
In one of the other corroborating statement, lawmaker Michael Dugher, wrote: "At no time did Mr Brown threaten the position of News International. Both Mr. Brown and Mr. Murdoch were entirely courteous and calm."
A former British leader accusing Murdoch of misleading the inquiry under oath will further tarnish the reputation of the world's most powerful media tycoon in a country which is home to some of his biggest newspaper and broadcasting interests.
A British parliamentary committee which investigated allegations of illegal phone-hacking by Murdoch publications has already deemed the Australian-born tycoon unfit to manage a major global company.
The cross-party parliamentary committee said in May that Murdoch was ultimately responsible for the illegal phone hacking that has corroded his global media empire and convulsed Britain's political elite.
Brown also challenged a version of events given by Murdoch's deputy, Rebekah Brooks, about a Sun report that Brown's four-month-old son Fraser had been diagnosed with cystic fibrosis.
Brooks, a close Murdoch confidante who was charged last month with interfering with a police investigation into the phone hacking scandal, told the inquiry the Browns had given their backing to the story.
"I have never sought to bring my children into the public domain," Brown said. He denied his consent had been given to publish the story.
"I find it sad that even now in 2012 members of the News International staff are coming to this inquiry and maintaining this fiction."
The former prime minister has questioned whether the paper had hacked into his son's medical records to get the story. Brooks has denied this and Murdoch has said the story was broken when a father of another child tipped off the newspaper.
"A father from the hospital in a similar position had called us, told us," Murdoch said in his testimony.
But Brown told the inquiry that the National Health Service in Fife had apologised to his family because information about his son came from NHS staff.
"There were only a few medical people who knew that our son had this condition," Brown said.
He said the NHS in Fife "now believe it highly likely that there was unauthorised information given by a medical or working member of the NHS staff that allowed the Sun through this middle man to publish this story," Brown said.
The Sun ran a story in July 2011 under the headline "Brown Wrong" which said the source of the story was a "shattered dad" who had a son with the genetic disorder and that Brown's wife, Sarah, had given the newspaper consent to run the story.
Brooks said on May 11 at Leveson that a small donation was made to the cystic fibrosis charity at the request of the man.
But Reuters has seen a copy of a letter from the chief executive of the Cystic Fibrosis Trust, Ed Owen, saying the Trust found no record of any donation by The Sun or News International at the time of the story.
The Sun newspaper also reported that its readers had helped Cystic Fibrosis Trust double its donations in the wake of their story about Fraser. But the letter from the Cystic Fibrosis Trust showed they had seen no significant increase in donations.
Regardless of who the source was, the subject of a front page splash detailing the serious illness of a four-month baby is likely to prove unedifying and garner sympathy for Brown, who has rarely appeared in public since he left office in 2010.
Murdoch described a relationship with Brown - whose political career effectively ended when he lost an election to incumbent Prime Minister David Cameron in 2010 - that included meals which their wives attended and conversations on topics ranging from charity to the war in Afghanistan.
Brooks told the Leveson inquiry she formed a friendship with Sarah Brown and that they had had a "pyjama party" at the prime minister's official country residence, Chequers, with Murdoch's daughter, Elisabeth, and his wife, Wendi.
But Murdoch said their relationship worsened after his media companies opposed Brown ahead of the 2010 election.
Brown told parliament in 2011 that News International was part of a "criminal-media-nexus" that had broken the law on an industrial scale.