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The Election Court in Uppermill in Saddleworth is sitting because the defeated Liberal Democrat candidate, Elwyn Watkins, believes he was cheated out of victory by lies in Labour election leaflets.

It is worth remembering that Mr Watkins is staking his finances on this political gamble and stands to lose as much as £200,000.

But on Tuesday Mr Watkins got his money's worth as the sitting MP, Phil Woolas, was forced to take the witness stand and endure a full day of cross-examination.

Labour made some serious allegations against Elwyn Watkins in the campaign. But it is worth remembering that Phil Woolas does not have to prove they were correct; only that he had reasonable grounds for believing them to be so.

Mr Woolas appeared to be in much better form than on Monday and did his best not to concede an inch.

Even so, as Chris Mason reports here, the MP admitted one of his leaflets, "sailed very close to the wind."

Mr Watkins's barrister, James Laddie, spent a great deal of time trying to destroy the claim that Elwyn Watkins was linked to Muslim extremists.

The Labour election newspaper, "The Examiner", ran a photo of Mr Watkins with the headline: "Watkins accused of wooing extremist vote". Above him was a photo of some militant Muslims.

Mr Woolas was forced to admit the photo was "not Oldham." In fact it was taken in London four years ago.

So, asked one of the two judges, Mr Justice Teare: "What was the relevance of the photograph?"

Mr Woolas said it represented all sorts of horrible things said about him on websites.

But the leaflet centred around another group, the controversial which endorsed Elwyn Watkins at the election.

MPAC was actively campaigning against Phil Woolas, and he described them in court as "extremists." There were similar descriptions in The Examiner.

The barrister suggested that readers would assume the extremists in the photograph were members of MPAC.

But Mr Woolas rejected that.

Mr Justice Teare again intervened: "Was there a threat of violence in any leaflet you have from MPAC?"

Mr Woolas conceded there was not.

So how was the Lib Dem "wooing" extremists?

Phil Woolas argued this was because Elwyn Watkins had not condemned any threats. And also because he had called for a ban on the sale of arms to Israel but not to Palestine.

James Laddie pointed out to Mr Woolas that the sale of arms to Palestine was already illegal. Therefore calling for a ban, "would be the equivalent of calling for Elizabeth Windsor to be made a queen," he said.

Another Labour leaflet, The Rose, came out a little later. The same photograph was published but this time voters were told that Mr Woolas had received a death threat.

The Liberal Democrat team believed this was another attempt to scare white people into supporting Mr Woolas and keeping clear of Elwyn Watkins.

"One extremist website has even created a competition for the most imaginative ways to kill Phil Woolas," Labour reported.

Again this was all linked to Elwyn Watkins with a paragraph headed: "Lib Dem Pact with the devil".

Mr Woolas accepted this macabre competition actually referred not to a website but a leaflet created by another group called RADAR.

Mr Justice Teare read the leaflet and concluded the author, "has not threatened you."

"He has not," accepted Mr Woolas.

James Laddie wanted to know if the death threat had been reported to the police. Mr Woolas thought so but was not sure. Though he was certain he had not reported it formally as a crime.

In fact, Phil Woolas had received a real death threat sent by email to the House of Commons which is being investigated. However in court it seemed highly unlikely that it had come from either a Muslim or a constituent.

Nevertheless, Mr Woolas concluded: "I believed the threat was real. I was not talking it up for political advantage."

Whatever the truth of all this, Labour is certainly not getting any political advantage from it now.

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