BBC News Correspondent Nick Higham tweeted:
There was an audible cheer in the BBC newsroom when Margaret Hodge accused BBC HR director Lucy Adams of lying to the PAC
Former Director General Mark Thompson said he had inherited a way of doing things at the BBC, telling MPs: "I did not loosen the financial controls in this area."
He was asked why Mark Byford required an extra payment when he was contractually due to receive around half-a-million pounds.
Mr Thompson, who said he did not believe there was any "favouritism" in deciding payoffs, said the payment to Mr Byford was needed so he could remain "focused" on his job and not be distracted
Stewart Jackson said evidence from HR boss Lucy Adams should be taken with "a bit of a pinch of salt" after she previously admitted making a mistake in her evidence to the committee.
Ms Adams, who announced last month she was quitting the BBC, initially told MPs she had not seen a note detailing plans for payoffs to Mark Byford and marketing boss Sharon Baylay - but now admits she helped write it.
She described Mr Jackson's comment as "grossly unfair" and said she made an honest mistake.
Committee chair Margaret Hodge told Ms Adams: "I am not having any more lies this afternoon."
Mark Thompson told MPs the BBC had not "lost the plot" when it agreed a payoff of almost £1 million to his former deputy, Mark Byford.
The former Director General said it was part of a move to axe senior executives which would give the BBC "£19 million of savings for every year into the future" and he believed he "had the full support of the BBC Trust" to order it.
Prime Minister David Cameron's official spokesman told a regular Westminster media briefing: "There are legitimate questions about the use of licence fee-payers' money that have been raised.
"There are legitimate questions that licence fee-payers should get an answer to.
"With regard to the questions that have been raised about payoffs and the like, there is a process in Parliament that is continuing today and I wouldn't comment more on it than that at this stage."
Lord Patten said he hoped to avoid "too much bitterness or wrangling" at a parliamentary hearing examining hefty payoffs given to senior staff at the BBC.
He said: "I hope we can have a reasonable exploration of what's gone wrong and of the issues without it getting into too much bitterness or wrangling because that is bad for the BBC."
Former BBC Director General Mark Thompson said he was "looking forward to talking to MPs later" as he left his house this morning.
Rob Wilson, Conservative MP for Reading East said anyone shown to have misled Parliament without proper justification should resign immediately or be sacked.
Speaking ahead of Lord Patten's appearance before MPs today he said it was "not good enough" for Patten to dismiss Mr Thompson's allegations.
Thompson's allegations have blown a hole in Lord Patten's argument that the Trust was only responsible for 'strategy' and had no operational involvement in executive payoffs.
More fundamentally, Thompson is alleging that Patten has given a false account to the public about his knowledge and involvement of the pay-offs issue for the last several months. It is not good enough for Lord Patten to dismiss Mr Thompson's allegations as 'bizarre'.
He must urgently shore up confidence in his position and he can only do so by answering each of the specific allegations made by Mark Thompson. The cloud gathering over his position will only darken if he fails to do so.
Former Director General of the BBC, Mark Thompson, will be questioned today by MPs over the heavily criticised payouts to a number of BBC staff.
Mr Thompson's appearance comes after he accused BBC Trust boss Lord Patten and trustee Anthony Fry of "fundamentally misleading" members of the Commons Public Accounts Committee.
His attack came in the form of a written statement submitted ahead of this afternoon's hearing.
Lord Patten and Mr Fry, told MPs members of the Trust were not always included in decision-making.
Mr Fry said there was ''some disconnect'' between what Mr Thompson had written in a letter to the Trust about deputy director general Mark Byford's payoff, in which he declared it was within contractual arrangements, when the National Audit Office (NAO) found it was not.
Mr Byford departed the BBC with a total payout of £949,000.
BBC Trust Chairman Lord Patten and former BBC Director General Mark Thompson will each appear in front of MPs from the Public Accounts Committee today to give more evidence about BBC severance packages.
A row broke out between the two last week after Mark Thompson said Lord Patten had been made aware of the controversial payoffs - something he denies.
MPs will also hear from Marcus Agius, former Chairman of the BBC Executive Board Renumeration Committee; Lord Anthony Fry, BBC Trustee; Sir Michael Lyons, former Trust Chairman and outgoing HR Director Lucy Adams.