KPMG quit as auditors of the Canadian parent company after it refused to make the management changes the firm demanded.

KPMG were demanding similiar management changes be made at Hollinger Inc, as were made at Hollinger International, where Lord Black resigned as chief executive last month.

In a statement Hollinger Inc said: 'The board concluded that until it receives the results of the special audit and independent counsel investigation, making personnel changes of the type made by Hollinger International would be premature, unfair to the individuals concerned and legally unjustifiable.'

The company has already seen four board and audit committee members resign in November when recommendations for management changes were rejected by the company's full board.

And yesterday, subsidiary, the Telegraph group, lost its chief executive, Dan Colson, who resigned as director and vice-chairman of Hollinger Inc to concentrate on his directorship at Hollinger International, where he is vice-chairman and chief operating officer.

KPMG in Toronto has refused to comment on its resignation, but Hollinger Inc said the firm would continue as auditors of Hollinger International.

Hollinger Inc holds 72.6% of the voting control and 30.3% of the equity of Hollinger International, which owns the Daily Telegraph, the Chicago Sun-Times and the Jerusalem Post.

Hollinger Inc is 78% owned by Conrad Black's private company, Ravelston.

Black resigned as chief executive of Hollinger International last month after an investigation uncovered £18m in payments to Black and other managers that were not authorised by the board. However, Black remains chief executive of the Toronto-based holding company.