Councillors have been gagged by threats of legal action if they reveal details of a secret investigation into Worthing Borough Council chief executive Sheryl Grady.

The warning has been circulated as town hall officials try to clamp down on leaks relating to the inquiry, which has been branded "draconian".

Exclusive revelations about the investigation in The Argus on Tuesday are said to have sent shockwaves around the borough's corridors of power and resulted in councillors receiving a further urgent memo ordering them not to talk.

One town hall source said: "We have been nigh on warned that everything will be thrown at us legal-wise."

Another insider said morale was very low in the chief executive's department and several employees had been signed off with stress.

A cross-party special personnel committee has been set up to lead the investigation, which also involves the GMB union.

One of the areas being looked at by the committee, consisting of four councillors, is Miss Grady's style of management, said to be "vociferous".

Miss Grady has refused to comment on the investigation, launched at last week's extraordinary meeting of the full council, which was held in private.

She has referred all calls to Bill Johnson, the council's assistant director of legal services, who said the matter was confidential and declined to comment.

One councillor has branded the investigation "vindictive, a storm in a tea cup and over the top".

The councillor said: "I have never known them to be this draconian with their secrecy."

Frank Minal, regional organiser for the GMB union, said: "The inquiry is completely necessary and it is unfair to make any comment until that is complete.

"I don't think it is credible to say it is a storm in a teacup. This is an independent inquiry which has to all intents and purposes been demanded by us."

The investigation will look back to the appointment of Miss Grady in 2000 when she succeeded Michael Ball, who took early retirement after a prolonged period of compassionate leave.

The Argus understands several other senior members of staff are being questioned.

Council leader Sheila Player, who has herself been the subject of a full-scale investigation into her conduct, refused to comment.

In late 2001, Coun Player had five official complaints about her conduct upheld following a marathon five-hour council hearing attended by Miss Grady.

Coun Player said then she had been through "five months of hell" after complaints about her conduct were lodged by two Conservative councillors and three neighbouring councils.

During the hearing, which was held in public, she read out an 18-page statement defending her actions, which took 45 minutes, but the borough council's standards committee upheld all the complaints.

The committee went into private session to decide its action and ruled Coun Player had to write personal apologies to Councillor Brian Lynn, then Tory leader of the borough council, and Councillor Tim Dice, former chairman of the modernisation committee.